AGREEMENT AND PLAN OF MERGER
By and Among
BCSB BANKCORP, INC.
BALTIMORE COUNTY SAVINGS BANK, F.S.B.
And
WHG BANCSHARES CORPORATION
And
HERITAGE SAVINGS BANK, F.S.B.
Dated as of February 27, 2002
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
RECITALS.......................................................................1
ARTICLE I CERTAIN DEFINITIONS..................................................2
Section 1.01 Definitions....................................................2
ARTICLE II THE MERGER AND EXCHANGE OF SHARES...................................6
Section 2.01 Effects of Merger; Surviving Corporation.......................6
Section 2.02 Conversion of Shares...........................................7
Section 2.03 Exchange Procedures............................................8
Section 2.04 Stock Options..................................................9
Section 2.05 MSBP Awards....................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF WHG AND Heritage Bank........................................9
Section 3.01 Organization..................................................10
Section 3.02 Capitalization................................................10
Section 3.03 Authority; No Violation.......................................11
Section 3.04 Consents......................................................12
Section 3.05 Financial Statements..........................................12
Section 3.06 Taxes.........................................................13
Section 3.07 No Material Adverse Effect....................................13
Section 3.08 Contracts.....................................................13
Section 3.09 Ownership of Property; Insurance Coverage.....................15
Section 3.10 Legal Proceedings.............................................15
Section 3.11 Compliance With Applicable Law................................16
Section 3.12 ERISA/Employee Compensation...................................16
Section 3.13 Brokers, Finders and Financial Advisors.......................19
Section 3.14 Environmental Matters.........................................19
Section 3.15 Loan Portfolio................................................20
Section 3.16 Information to be Supplied....................................21
Section 3.17 Related Party Transactions....................................22
Section 3.18 Schedule of Termination Benefits..............................22
Section 3.19 Deposits......................................................22
Section 0.00.Xxxxxxxx Combination..........................................22
Section 3.21 Fairness Opinion..............................................22
Section 3.22 Risk Management Instruments...................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF BALTIMORE COUNTY SAVINGS BANK AND BCSB Bancorp..............23
Section 4.01 Organization..................................................23
Section 4.02 Authority; No Violation.......................................24
Section 4.03 Consents......................................................25
Section 4.04 Compliance With Applicable Law................................25
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Section 4.05 Information to be Supplied....................................26
Section 4.06 Financing.....................................................26
Section 4.07 BCSB Financials...............................................26
Section 4.08 Litigation....................................................26
ARTICLE V COVENANTS OF THE PARTIES............................................26
Section 5.01 Conduct of Heritage Bank's Business...........................26
Section 5.02 Access; Confidentiality.......................................29
Section 5.03 Regulatory Matters and Consents...............................30
Section 5.04 Taking of Necessary Action....................................31
Section 5.05 Certain Agreements............................................32
Section 5.06 No Other Bids and Related Matters.............................33
Section 5.07 Duty to Advise; Duty to Update Heritage Bank's
Disclosure Schedules..........................................34
Section 5.08 Conduct of Baltimore County Bank's Business...................34
Section 5.09 Board and Committee Minutes...................................35
Section 5.10 Undertakings by the Parties...................................35
Section 5.11 Employee and Termination Benefits.............................37
Section 5.12 Duty to Advise; Duty to Update Baltimore County Bank's
Disclosure Schedules........................................39
ARTICLE VI CONDITIONS.........................................................39
Section 6.01 Conditions to WHG and Heritage Bank's Obligations
under this Agreement..........................................39
Section 6.02 Conditions to BCSB and Baltimore County Bank's Obligations
under this Agreement..........................................40
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT.................................41
Section 7.01 Termination...................................................41
Section 7.02 Effect of Termination.........................................43
ARTICLE VIII MISCELLANEOUS....................................................43
Section 8.01 Expenses......................................................43
Section 8.02 Non-Survival of Representations and Warranties................44
Section 8.03 Amendment, Extension and Waiver...............................44
Section 8.04 Entire Agreement..............................................44
Section 8.05 No Assignment.................................................44
Section 8.06 Notices.......................................................44
Section 8.07 Captions......................................................45
Section 8.08 Counterparts..................................................45
Section 8.09 Severability..................................................46
Section 8.10 Governing Law.................................................46
Exhibits:
Exhibit A Form of Heritage Bank Voting Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 27, 2002, is by and among BCSB Bankcorp, Inc., a federal corporation
("BCSB"), Baltimore County Savings Bank, F.S.B., a federally chartered savings
bank ("Baltimore County Bank"), and WHG Bancshares Corporation ("WHG"), a
Maryland corporation, and Heritage Savings Bank, F.S.B., a federally chartered
savings bank ("Heritage Bank"). Each of BCSB, Baltimore County Bank, WHG and
Heritage Bank is sometimes individually referred to herein as a "party," and
BCSB, Baltimore County Bank, WHG and Heritage Bank are sometimes collectively
referred to herein as the "parties."
RECITALS
WHEREAS, BCSB, a registered savings and loan holding company, with
principal offices in Baltimore, Maryland, owns all of the issued and outstanding
capital stock of Baltimore County Bank, a federally-chartered savings bank
organized under the laws of the United States, with principal offices in
Baltimore, Maryland.
WHEREAS, WHG, a registered savings and loan holding company, with
principal offices in Lutherville, Maryland, owns all of the issued and
outstanding capital stock of Heritage Bank, a federally-chartered savings bank
organized under the laws of the United States, with principal offices in
Lutherville, Maryland.
WHEREAS, the Boards of Directors of the respective parties hereto deem
it advisable and in the best interests of the respective companies and their
stockholders to consummate the business combination transaction contemplated
herein in which: (i) Baltimore County Bank shall incorporate a to-be-formed
company, which shall be merged with and into WHG, with WHG surviving the merger,
and in connection therewith each share of WHG Common Stock outstanding
immediately prior to the Closing Date shall be canceled in exchange for the
right to receive the cash payments specified herein, (the "Merger") (ii) to be
followed by the liquidation of WHG into Baltimore County Bank; and (iii)
immediately thereafter Heritage Bank shall merge with and into Baltimore County
Bank, with Baltimore County Bank surviving the merger (the "Bank Merger") with
the result that Baltimore County Bank will acquire all the assets and
liabilities of Heritage Bank, and Heritage Bank shall cease to exist (the
transactions are sometimes collectively referred to as the "Mergers");
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
Mergers, and the other transactions contemplated by this Agreement
(collectively, the "Merger Documents").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions.
Except as otherwise provided herein, as used in this Agreement, the
following terms shall have the indicated meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means any Person who directly, or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person and, without limiting the generality of
the foregoing, includes any executive officer or director of such Person
and any Affiliate of such executive officer or director.
"Agreement" means this agreement, and any amendment or supplement
hereto, which constitutes a "plan of merger" between BCSB, Baltimore
County Bank, a to-be-formed interim company, and WHG.
"Applications" means the applications for regulatory approval
that are required by the transactions contemplated hereby.
"Baltimore County Bank Employee Plan" means all pension,
retirement, group insurance, and other tax-qualified employee benefit
plan and arrangements, including, but not limited to, "employee benefit
plans," as defined in Section 3(3) of ERISA, incentive and welfare
policies, plans and arrangements with respect to employees of Baltimore
County Bank.
"Bank Merger" means the merger of Heritage Bank with and into
Baltimore County Bank, with Baltimore County Bank as the surviving
institution, and shall include the liquidation of WGH, as the surviving
corporation of the Merger, into Baltimore County Bank.
"Bank Merger Effective Date" shall mean the date, after the OTS
approves the Bank Merger, that all filings are made with the OTS to
perfect the Bank Merger.
"BCSB Financials" means (i) the audited consolidated financial
statements of BCSB as of September 30, 2000 and 2001 and for the two
years ended September 30, 2001, including the notes thereto, and (ii)
the unaudited interim consolidated financial statements of BCSB as of
each calendar quarter thereafter included in the documents filed by BCSB
pursuant to the Exchange Act.
"BCSB Subsidiary" means any corporation, 50% or more of the
capital stock of which is owned, either directly or indirectly, by BCSB
or Baltimore County Bank, except any corporation the stock of which is
held as security by Baltimore County Bank in the ordinary course of its
lending activities.
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"BCSB Disclosure Schedules" means the Disclosure Schedules
delivered by BCSB to Heritage Bank pursuant to Article IV of this
Agreement.
"Closing Date" means the date determined by BCSB, in its sole
discretion, upon five (5) days prior written notice to WHG, but in no
event later than fifteen (15) days after the last condition precedent
pursuant to this Agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or such other date as to
which BCSB and WHG shall mutually agree.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans" has the meaning given to such
term in Section 3.12(a).
"DOL" means the U.S. Department of Labor.
"Environmental Law" means any Federal or state law, statute,
rule, regulation, code, order, judgment, decree, injunction, common law
or agreement with any Federal or state governmental authority relating
to (i) the protection, preservation or restoration of the environment
(including air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any
other natural resource), (ii) human health or safety, or (iii) exposure
to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of, Hazardous Material, in each case as amended and now in
effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated from time to time
thereunder.
"Exchange Agent" means the entity selected by BCSB, subject to
the approval of WHG, to perform the functions described in Section 2.03
of this Agreement.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB of Atlanta" means the Federal Home Loan Bank of Atlanta.
"FRB" means the Board of Governors of the Federal Reserve System.
"GAAP" means generally accepted accounting principles as in
effect at the relevant date and consistently applied.
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"Hazardous Material" means any substance (whether solid, liquid
or gas) which is or could be detrimental to human health or safety or to
the environment, currently or hereafter listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or by quantity,
including any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance, oil or petroleum, or any
derivative or by-product thereof, radon, radioactive material, asbestos,
asbestos-containing material, urea formaldehyde foam insulation, lead
and polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act, as amended, 12 U.S.C.
ss.1464 et al.
"Interim" means the to-be-formed subsidiary of Baltimore County
Bank that will be merger with and into WHG.
"IRS" means the Internal Revenue Service.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) means
those facts that are known by the officers and directors of such Person,
and includes any facts, matters or circumstances set forth in any
written notice from a Regulatory Authority or any other material written
notice received by that Person. References to the "Knowledge" of WHG
includes the "Knowledge" of Heritage Bank.
"Loan" includes loan participations.
"Loan Property" shall have the meaning given to such term in
Section 3.14(b) of this Agreement.
"MGCL" means the Maryland General Corporation Law.
"Material Adverse Effect" shall mean, with respect to BCSB or
Heritage Bank, any adverse effect on its assets, financial condition or
results of operations which is material to its assets, financial
condition or results of operations on a consolidated basis, except for
any material adverse effect caused by (i) any change in the market value
of the assets of BCSB or Heritage Bank resulting from a change in
interest rates generally (ii) any individual or combination of changes
occurring after the date hereof in any federal or state law, rule or
regulation or in GAAP, which change(s) affect(s) financial institutions
generally, (iii) any action taken by Heritage Bank or a WHG Subsidiary
at the request of Baltimore County Bank, (iv) expenses incurred to
complete the transaction contemplated by this Agreement; or (v) an
increase by the FDIC, pursuant to Section 327.9 of the FDIC Regulations
(12 CFR ss.327.9), in the BIF or SAIF Assessment Schedule.
"Merger" means the merger of the to-be-formed subsidiary of
Baltimore County Bank with and into WHG, with WHG as the surviving
entity.
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"Merger Effective Date" means that date upon which the last of
the corporate transactions that comprise the Merger becomes effective,
in accordance with applicable laws and regulations.
"OTS" means the Office of Thrift Supervision.
"Participation Facility" shall have the meaning given to such
term in Section 3.14(b) of this Agreement.
"Person" means any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under
the Exchange Act).
"Proxy Statement" means the proxy statement, together with any
supplements thereto, to be transmitted to holders of WHG Common Stock in
connection with the transactions contemplated by this Agreement.
"Regulatory Agreement" has the meaning given to that term in
Section 3.11 of this Agreement.
"Regulatory Authority" means any agency or department of any
federal or state government, including without limitation the OTS, the
FDIC, the FRB, the SEC or the respective staffs thereof.
"Rights" means warrants, options, rights, convertible securities
and other capital stock equivalents that obligate an entity to issue its
securities.
"SAIF" means the Savings Association Insurance Fund, as
administered by the FDIC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements,
schedules, statements, forms, reports, proxy material, and other
documents required to be filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange Act
and the rules and regulations promulgated from time to time thereunder.
"Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by another
entity, except any corporation the stock of which is held as security by
either BCSB or WHG, as the case may be, in the ordinary course of its
lending activities.
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"Superior Proposal" has the meaning given to such term in Section
5.06 of this Agreement.
"WHG Common Stock" has the meaning given to that term in Section
3.02(a) of this Agreement.
"WHG Disclosure Schedules" means the Disclosure Schedules
delivered by Heritage Bank to Baltimore County Bank pursuant to Article
III of this Agreement.
"WHG Financials" means (i) the audited consolidated financial
statements of WHG as of September 30, 2000 and 2001 and for the two
years ended September 30, 2001, including the notes thereto, and (ii)
the unaudited interim consolidated financial statements of WHG as of
each calendar quarter thereafter included in Securities Documents filed
by WHG.
"WHG Regulatory Reports" means the Thrift Financial Reports of
Heritage Bank and accompanying schedules, as filed with the OTS, for
each calendar quarter beginning with the quarter ended March 31, 2001,
through the Closing Date, and all Annual, Quarterly and Current Reports
filed on Form H(b)-11 with the OTS by WHG from March 31, 2001 through
the Closing Date.
"WHG Subsidiary" means any corporation, 50% or more of the
capital stock of which is owned, either directly or indirectly, by WHG,
including Heritage Bank, except any corporation the stock of which is
held as security by WHG or Heritage Bank in the ordinary course of its
lending activities.
ARTICLE II
THE MERGER AND EXCHANGE OF SHARES
Section 2.01 Effects of Merger; Surviving Corporation.
(a) ...(i) On the Merger Effective Date, a to-be-formed company formed
by Baltimore County Bank ("Interim") shall merge with and into WHG; the separate
existence of Interim shall cease; WHG shall be the surviving corporation in the
Merger (the "Surviving Corporation") and a wholly-owned subsidiary of Baltimore
County Bank; and all of the property (real, personal and mixed), rights, powers
and duties and obligations of Interim shall be taken and deemed to be
transferred to and vested in WHG, as the Surviving Corporation in the Merger,
without further act or deed; all in accordance with federal law.
(ii) On the Merger Effective Date: the Articles of Incorporation
of the Surviving Corporation shall continue as in effect immediately prior to
the Merger Effective Date; and the Bylaws of the Surviving Corporation shall
continue as in effect immediately prior to the Merger Effective Date, until
thereafter altered, amended or repealed in accordance with applicable law.
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(iii) On the Merger Effective Date, the directors of Interim duly
elected and holding office immediately prior to the Effective Date shall be the
directors of the Surviving Corporation in the Merger, each to hold office until
his or her successor is elected and qualified or otherwise in accordance with
the Articles of Incorporation and Bylaws of the Surviving Corporation.
(iv) On the Merger Effective Date, the officers of Interim duly
elected and holding office immediately prior to the Effective Date shall be the
officers of the Surviving Corporation in the Merger, each to hold office until
his or her successor is elected and qualified or otherwise in accordance with
the Articles of Incorporation and the Bylaws of the Surviving Corporation.
(b)....Notwithstanding any provision of this Agreement to the contrary,
BCSB may elect, subject to the filing of all necessary applications and the
receipt of all required regulatory approvals, to modify the structure of the
transactions contemplated hereby, and the parties shall enter into such
alternative transactions, so long as (i) there are no adverse tax consequences
to the stockholders, directors or officers of WHG as a result of such
modification, (ii) the Merger Consideration is not thereby changed in kind or
reduced in amount because of such modification and (iii) such modification will
not be likely to materially delay or jeopardize receipt of any required
regulatory approvals.
Section 2.02 Conversion of Shares.
(i) Each outstanding share of WHG Common Stock issued and
outstanding at the Merger Effective Date, except as provided in clause (ii) and
(iii) of this Section, shall cease to be outstanding, shall cease to exist and
shall be converted into the right to receive $14.25 in cash (the "Merger
Consideration").
(ii) Any shares of WHG Common Stock which are owned or held by
either party hereto or any of their respective Subsidiaries (other than in a
fiduciary capacity or in connection with debts previously contracted) at the
Merger Effective Date shall cease to exist, the certificates for such shares
shall as promptly as practicable be canceled, such shares shall not be converted
into the Merger Consideration, and no cash or shares of capital stock of BCSB
shall be issued or exchanged therefor.
(iii) Each share of BCSB Common Stock issued and outstanding
immediately before the Merger Effective Date shall remain an outstanding share
of Common Stock of the Surviving Corporation.
(iv) The holders of certificates representing shares of WHG
Common Stock as of the Merger Effective Date (any such certificate being
hereinafter referred to as a "Certificate") shall cease to have any rights as
stockholders of WHG, except such rights, if any, as they may have pursuant to
applicable law.
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Section 2.03 Exchange Procedures.
(a) As promptly as practicable after the Effective Date (but in no
event later than five (5) business days after the Effective Date), the Exchange
Agent shall mail to each holder of record of an outstanding share Certificate or
Certificates a Letter of Transmittal containing instructions for the surrender
of the Certificate or Certificates held by such holder for payment therefor.
Upon surrender of the Certificate or Certificates to the Exchange Agent in
accordance with the instructions set forth in the Letter of Transmittal, such
holder shall promptly receive in exchange therefor the Merger Consideration,
without interest thereon. Approval of this Agreement by the stockholders of
Heritage Bank shall constitute authorization for BCSB to designate and appoint
such Exchange Agent, with the approval of WHG. Neither BCSB nor the Exchange
Agent shall be obligated to deliver the Merger Consideration to a former
stockholder of WHG until such former stockholder surrenders his Certificate or
Certificates or, in lieu thereof, any such appropriate affidavit of loss and
indemnity agreement and bond as may be reasonably required by BCSB.
(b) If payment of the Merger Consideration is to be made to a person
other than the person in whose name a Certificate surrendered in exchange
therefor is registered, it shall be a condition of payment that the Certificate
so surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such payment shall pay any transfer or other taxes required by
reason for the payment to a person other than the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(c) On or prior to the Merger Effective Date, BCSB shall deposit or
cause to be deposited, in trust with the Exchange Agent, an amount of cash equal
to the aggregate Merger Consideration that the WHG stockholders shall be
entitled to receive on the Merger Effective Date pursuant to Section 2.02
hereof.
(d) The payment of the Merger Consideration, and cash in lieu of any
fractional shares, upon the conversion of WHG Common Stock in accordance with
the above terms and conditions shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to such WHG Common Stock.
(e) Promptly following the date which is twelve months after the
Merger Effective Date, the Exchange Agent shall deliver to BCSB all cash,
certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing shares of WHG
Common Stock may surrender such Certificate to Baltimore County Bank and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the Merger Consideration multiplied by the number of
shares of WHG Common Stock formerly represented by such Certificate, without any
interest or dividends thereon.
(f) After the close of business on the Merger Effective Date, there
shall be no transfers on the stock transfer books of WHG of the shares of WHG
Common Stock that are outstanding
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immediately prior to the Merger Effective Date, and the stock transfer books of
WHG shall be closed with respect to such shares. If, after the Merger Effective
Date, Certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be canceled and exchanged for the Merger
Consideration as provided in this Article II.
(g) In the event any certificate for WHG Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall deliver (except as otherwise
provided in Section 2.02(iii)) in exchange for such lost, stolen or destroyed
certificate, upon the making of an affidavit of the fact by the holder thereof,
the cash to be paid in the Merger as provided for herein; provided, however,
that BCSB may, in its sole discretion and as a condition precedent to the
delivery thereof, require the owner of such lost, stolen or destroyed
certificate to deliver a bond in such reasonable sum as BCSB may require as
indemnity against any claim that may be made against WHG, BCSB or any other
party with respect to the certificate alleged to have been lost, stolen or
destroyed.
(h) BCSB is hereby authorized, after consulting with WHG, to adopt
additional requirements with respect to the matters referred to in this Section
2.03 not inconsistent with the provisions of this Agreement or unduly burdensome
to the shareholders of WHG.
Section 2.04 Stock Options.
At the Merger Effective Date, each option granted by WHG (a "WHG
Option") to purchase shares of WHG Common Stock issued and outstanding pursuant
to the WHG 1996 Stock Option Plan or the WHG 2001 Stock Option Plan (the "WHG
Stock Option Plans"), whether or not such option is exercisable on the Merger
Effective Date, shall, by reason of the Merger, cease to be outstanding and each
holder of an option shall receive from WHG, at the Closing Date, cash in an
amount equal to (i) the difference (if a positive number) between (A) $14.25 and
(B) the exercise price of each such option multiplied by (ii) the number of
shares of WHG Common Stock subject to the option.
Section 2.05 MSBP Awards.
As set forth in WHG DISCLOSURE SCHEDULE 2.05, holders of stock awards
under the WHG Management Stock Bonus Plan ("MSBP") that are not vested prior to
the Merger Effective Date shall be canceled and exchanged for a payment to be
made by Heritage Bank (or if requested by Baltimore County Bank, such payment
may be made by Baltimore County Bank) to the recipient of such awards not later
than the Merger Effective Date in an amount equal to the product of the number
of shares of WHB Common Stock subject to such awards and the Merger
Consideration, less applicable tax withholding; provided that such recipient
shall deliver a cancellation agreement in form and substance reasonably
satisfactory to the BCSB prior to receipt of such payment.
ARTICLE III....
REPRESENTATIONS AND WARRANTIES OF WHG AND Heritage Bank
WHG and Heritage Bank represent and warrant to BCSB and Baltimore County
Bank that the statements contained in this Article III are correct and complete
as of the date of this Agreement and
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will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article III), except as set forth in the WHG Disclosure
Schedules delivered by WHG to BCSB on or prior to the date hereof. WHG and
Heritage Bank have made a good faith effort to ensure that the disclosure on
each schedule of the WHG Disclosure Schedules corresponds to the section
reference herein. However, for purposes of the WHG Disclosure Schedules, any
item disclosed on any schedule is deemed to be fully disclosed with respect to
all schedules under which such item may be relevant.
Section 3.01 Organization.
(a) WHG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland, and is duly registered as a
savings and loan holding company under the HOLA. WHG has full corporate power
and authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on WHG. Heritage Bank is
the only subsidiary of WHG.
(b) Heritage Bank is a stock savings bank organized, validly
existing and in good standing under federal law. Heritage Bank is the only WHG
Subsidiary. The deposits of Heritage Bank are insured by the FDIC through the
SAIF to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid by Heritage Bank when
due. Heritage Bank has no subsidiaries.
(c) Heritage Bank is a member of the FHLB of Atlanta and owns the
requisite amount of stock therein.
(d) The respective minute books of WHG and each WHG Subsidiary
accurately records, in all material respects, all material corporate actions of
their respective shareholders and boards of directors (including committees)
through the date of this Agreement.
(e) Prior to the date of this Agreement, WHG has made available to
BCSB true and correct copies of the articles or certificate of incorporation and
bylaws of WHG and Heritage Bank.
Section 3.02 Capitalization.
(a) The authorized capital stock of WHG consists of 4,000,000 shares
of common stock, $0.10 par value ("WHG Common Stock"), of which 1,285,050 shares
are outstanding, validly issued, fully paid and non-assessable and free of
preemptive rights, and 1,000,000 shares of preferred stock, $0.10 par value
("WHG Preferred Stock"), none of which are outstanding. There are no shares of
WHG Common Stock held by WHG as treasury stock. Neither WHG nor any WHG
Subsidiary has or is bound by any Rights of any character relating to the
purchase, sale or issuance or voting of, or right to receive dividends or other
distributions on any shares of WHG Common Stock, or any other security of WHG or
any securities representing the right to vote, purchase or otherwise receive any
shares of WHG Common Stock or any other security of WHG, other than shares
issuable under the WHG Stock Option Plans and the WHG MSBP. WHG DISCLOSURE
SCHEDULE 3.02(a) sets
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forth, as of the date hereof, the name of each holder of an option to purchase
WHG Common Stock, the number of shares each such individual may acquire pursuant
to the exercise of such options, the vesting dates, and the exercise price
relating to the options held, and the name of each grantee of an award under the
MSBP, the number of shares subject to each award, and the vesting schedule of
each award.
(b) WHG owns all of the capital stock of Heritage Bank, free and
clear of any lien or encumbrance.
Section 3.03 Authority; No Violation.
(a) WHG and Heritage Bank each has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by WHG and Heritage Bank and the completion by WHG and Heritage Bank of the
transactions contemplated hereby, up to and including the Merger, have been duly
and validly approved by the Board of Directors of WHG and Heritage Bank,
respectively, and, except for approval of the shareholders of WHG and Regulatory
Authorities, no other corporate proceedings on the part of WHG or Heritage Bank
are necessary to complete the transactions contemplated hereby, up to and
including the Merger. This Agreement has been duly and validly executed and
delivered by WHG and Heritage Bank, and the Bank Merger has been duly and
validly approved by the Board of Directors of Heritage Bank, and by WHG in its
capacity as sole stockholder of Heritage Bank, and subject to approval by the
shareholders of WHG and receipt of the required approvals of Regulatory
Authorities described in Section 4.03 hereof, constitutes the valid and binding
obligations of WHG and Heritage Bank, enforceable against WHG and Heritage Bank
in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and as to Heritage Bank, the
conservatorship or receivership provisions of the FDIA, and subject, as to
enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by WHG and
Heritage Bank, (B) subject to receipt of approvals from the Regulatory
Authorities referred to in Section 4.03 hereof, and WHG's and BCSB's compliance
with any conditions contained therein, and subject to the receipt of the
approval of WHG's stockholders, the consummation of the transactions
contemplated hereby, and (C) compliance by WHG and Heritage Bank with any of the
terms or provisions hereof will not: (i) conflict with or result in a breach of
any provision of the articles of incorporation or bylaws of WHG or any WHG
Subsidiary or the charter and bylaws of Heritage Bank; (ii) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to WHG or any WHG Subsidiary or any of their respective properties or
assets; or (iii) violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default), under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of WHG or Heritage Bank under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other investment or
obligation to which WHG or Heritage Bank is a party, or by which they or any of
their respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults under clause (ii) or (iii)
11
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on WHG and the WHG Subsidiaries taken as a whole.
Section 3.04 Consents.
Except for the consents, waivers, approvals, filings and registrations
from or with the Regulatory Authorities referred to in Section 4.03 hereof and
compliance with any conditions contained therein, and the approval of this
Agreement by the requisite vote of the shareholders of WHG, no consents, waivers
or approvals of, or filings or registrations with, any Regulatory Authority are
necessary, and, to WHG's Knowledge, no consents, waivers or approvals of, or
filings or registrations with, any other third parties are necessary, in
connection with (a) the execution and delivery of this Agreement by WHG and
Heritage Bank, and (b) the completion by WHG and Heritage Bank of the Merger and
the Bank Merger. WHG and Heritage Bank have no reason to believe that (i) any
required Regulatory Approvals or other required consents or approvals will not
be received, or that (ii) any public body or authority, the consent or approval
of which is not required or to which a filing is not required, will object to
the completion of the transactions contemplated by this Agreement.
Section 3.05 Financial Statements.
(a) WHG has previously made available to BCSB the WHG Regulatory
Reports. The WHG Regulatory Reports have been prepared in all material respects
in accordance with applicable regulatory accounting principles and practices
throughout the periods covered by such statements, and fairly present in all
material respects, the consolidated financial position, results of operations
and changes in shareholders' equity of WHG as of and for the periods ended on
the dates thereof, in accordance with applicable regulatory accounting
principles applied on a consistent basis.
(b) WHG has previously made available to BCSB the WHG Financials.The
WHG Financials have been prepared in accordance with GAAP, and (including the
related notes where applicable) fairly present in each case in all material
respects (subject in the case of the unaudited interim statements to normal
year-end adjustments), the consolidated financial position, results of
operations and cash flows of WHG and the WHG Subsidiaries on a consolidated
basis as of and for the respective periods ending on the dates thereof, in
accordance with GAAP applied on a consistent basis during the periods involved,
except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-QSB.
(c) At the date of each balance sheet included in the WHG Financials
or the WHG Regulatory Reports, WHG did not have any liabilities, obligations or
loss contingencies of any nature (whether absolute, accrued, contingent or
otherwise) of a type required to be reflected in such WHG Financials or WHG
Regulatory Reports or in the footnotes thereto which are not fully reflected or
reserved against therein or fully disclosed in a footnote thereto, except for
liabilities, obligations and loss contingencies which are not material
individually or in the aggregate or which are incurred in the ordinary course of
business, consistent with past practice, and except for liabilities, obligations
and loss contingencies which are within the subject matter of a specific
representation and warranty herein and subject, in the case of any unaudited
statements, to normal, recurring audit adjustments and the absence of footnotes.
12
Section 3.06 Taxes.
WHG and the WHG Subsidiaries are members of the same affiliated group
within the meaning of Code Section 1504(a). WHG has duly filed all federal,
state and material local tax returns required to be filed by or with respect to
WHG and all WHG Subsidiaries on or prior to the Closing Date (all such amounts
shown to be due have been paid) and has duly paid or made provisions for the
payment of all material federal, state and local taxes which have been incurred
by or are due or claimed to be due from WHG and any WHG Subsidiary by any taxing
authority or pursuant to any written tax sharing agreement on or prior to the
Closing Date other than taxes or other charges which (i) are not delinquent,
(ii) are being contested in good faith, or (iii) have not yet been fully
determined. As of the date of this Agreement, there is no audit examination,
deficiency assessment, tax investigation or refund litigation with respect to
any taxes of WHG or any of its Subsidiaries, and no claim has been made by any
authority in a jurisdiction where WHG or any of its Subsidiaries do not file tax
returns that WHG or any such Subsidiary is subject to taxation in that
jurisdiction. WHG and its Subsidiaries have not executed an extension or waiver
of any statute of limitations on the assessment or collection of any material
tax due that is currently in effect. WHG and each of its Subsidiaries has
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and WHG and each of its Subsidiaries
has timely complied with all applicable information reporting requirements under
Part III, Subchapter A of Chapter 61 of the IRC and similar applicable state and
local information reporting requirements.
Section 3.07 No Material Adverse Effect.
WHG and the WHG Subsidiaries, taken as a whole, have not suffered any
Material Adverse Effect since September 30, 2001, and no event has occurred or
circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on WHG and the WHG
Subsidiaries.
Section 3.08 Contracts.
(a) Except as set forth in WHG DISCLOSURE SCHEDULE 3.08(a), neither
WHG nor any WHG Subsidiary is a party to or subject to: (i) any employment,
consulting or severance contract or material arrangement with any past or
present officer, director or employee of WHG nor any WHG Subsidiary, except for
"at will" arrangements; (ii) any plan, material arrangement or contract
providing for bonuses, pensions, options, deferred compensation, retirement
payments, profit sharing or similar material arrangements for or with any past
or present officers, directors or employees of WHG or any WHG Subsidiary; (iii)
any collective bargaining agreement with any labor union relating to employees
of WHG or any WHG Subsidiary; (iv) any agreement which by its terms limits the
payment of dividends by Heritage Bank; (v) any instrument evidencing or related
to material indebtedness for borrowed money whether directly or indirectly, by
way of purchase money obligation, conditional sale, lease purchase, guaranty or
otherwise, in respect of which WHG or any WHG Subsidiary is an obligor to any
person, which instrument evidences or relates to indebtedness other than
13
deposits, borrowings from the FHLB of Atlanta, repurchase agreements, bankers'
acceptances, and "treasury tax and loan" accounts established in the ordinary
course of business and transactions in "federal funds" or which contains
financial covenants or other restrictions (other than those relating to the
payment of principal and interest when due) which would be applicable on or
after the Closing Date to BCSB or any BCSB Subsidiary; (vi) any agreement,
written or oral, that obligates WHG or any WHG Subsidiary for the payment of
more than $25,000 annually; or (vii) any contract (other than this Agreement)
limiting the freedom, in any material respect, of WHG to engage in any type of
banking or bank-related business which it or Heritage Bank is permitted to
engage in under applicable law as of the date of this Agreement.
(b) True and correct copies of agreements, plans, contracts,
arrangements and instruments referred to in Section 3.08(a), have been provided
to BCSB on or before the date hereof, are listed on WHG DISCLOSURE SCHEDULE
3.08(a) and are in full force and effect on the date hereof and neither WHG nor
any WHG Subsidiary (nor, to the knowledge of Heritage Bank, any other party to
any such contract, plan, arrangement or instrument) has materially breached any
provision of, or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument. Except as set forth in the WHG
DISCLOSURE SCHEDULE 3.08(b), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. Except
as set forth in WHG DISCLOSURE SCHEDULE 3.08(b), none of the employees
(including officers) of WHG or any WHG Subsidiary, possess the right to
terminate their employment and receive or be paid (or cause WHG or any WHG
Subsidiary to accrue on their behalf) benefits solely as a result of the
execution of this Agreement or the consummation of the transactions contemplated
thereby. Except as set forth in WHG DISCLOSURE SCHEDULE 3.08(b), no plan,
contract, employment agreement, termination agreement, or similar agreement or
arrangement to which WHG or any WHG Subsidiary is a party or under which WHG or
any WHG Subsidiary may be liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue to accrue
future benefits thereunder. Except as set forth in WHG DISCLOSURE SCHEDULE
3.08(b), no such agreement, plan, contract, or arrangement (x) provides for
acceleration in the vesting of benefits or payments due thereunder upon the
occurrence of a change in ownership or control of WHG or any WHG Subsidiary or
upon the occurrence of a subsequent event; or (y) requires WHG or any WHG
Subsidiary to provide a benefit in the form of WHG Common Stock or determined by
reference to the value of WHG Common Stock. Except as set forth in WHG
DISCLOSURE SCHEDULE 3.08(b) no such agreement, plan or arrangement with respect
to officers or directors of WHG or Heritage Bank or to its employees, provides
for benefits that may cause an "excess parachute payment" or the disallowance of
a federal income tax deduction under IRC Section 280G.
(c) Each real estate lease that may require the consent of the
lessor or its agent resulting from the Merger by virtue of a prohibition or
restriction relating to assignment, by operation of law or otherwise, or change
in control, is listed in WHG DISCLOSURE SCHEDULE 3.08 identifying the section of
the lease that contains such prohibition or restriction. Neither WHG nor any WHG
Subsidiary is in default in any material respect under any material contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party, by which its assets, business, or operations may be
bound or affected, or under which it or its assets, business, or operations
receive benefits, and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default.
14
Section 3.09 Ownership of Property; Insurance Coverage.
(a) WHG and the WHG Subsidiaries have good and, as to real property,
marketable title to all material assets and properties owned by WHG or any WHG
Subsidiary in the conduct of their businesses, whether such assets and
properties are real or personal, tangible or intangible, including assets and
property reflected in the balance sheets contained in the WHG Regulatory Reports
and in the WHG Financials or acquired subsequent thereto (except to the extent
that such assets and properties have been disposed of in the ordinary course of
business, since the date of such balance sheets), subject to no material
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items which secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to the FHLB of Atlanta,
inter-bank credit facilities, or any transaction by a WHG Subsidiary acting in a
fiduciary capacity, (ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith, and (iii) items permitted under Article V.
WHG and the WHG Subsidiaries, as lessee, have the right under valid and
subsisting leases of real and personal properties used by WHG and its
Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them. Except as disclosed
in WHG DISCLOSURE SCHEDULE 3.09, such existing leases and commitments to lease
constitute or will constitute operating leases for both tax and financial
accounting purposes and the lease expense and minimum rental commitments with
respect to such leases and lease commitments are as disclosed in the Notes to
the WHG Financials.
(b) With respect to all material agreements pursuant to which WHG or
any WHG Subsidiary has purchased securities subject to an agreement to resell,
if any, WHG or such WHG Subsidiary, as the case may be, has a lien or security
interest (which to WHG `s knowledge is a valid, perfected first lien) in the
securities or other collateral securing the repurchase agreement, and the value
of such collateral equals or exceeds the amount of the debt secured thereby.
(c) WHG and each WHG Subsidiary currently maintains insurance
considered by WHG to be reasonable for their respective operations, in
accordance with good business practice. WHG has not received notice from any
insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no material claims pending under such policies of insurance and no notices have
been given by WHG or any WHG Subsidiary under such policies. All such insurance
is valid and enforceable and in full force and effect, and within the last three
years WHG and each WHG Subsidiary has received each type of insurance coverage
for which it has applied and during such periods has not been denied
indemnification for any material claims submitted under any of its insurance
policies.
Section 3.10 Legal Proceedings.
Except as disclosed in WHG DISCLOSURE SCHEDULE 3.10, neither WHG nor any
WHG Subsidiary is a party to any, and there are no pending or, to WHG's
knowledge, threatened legal, administrative, arbitration or other proceedings,
claims, actions or governmental investigations or inquiries of any nature (i)
against WHG or any WHG Subsidiary, (ii) to which WHG or any WHG Subsidiary's
assets are or may be subject, (iii) challenging the validity or propriety of any
of the transactions contemplated by or relating to this Agreement, or (iv) which
could adversely affect the
15
ability of WHG or Heritage Bank to perform under this Agreement, except for any
proceedings, claims, actions, investigations or inquiries referred to in clauses
(i) or (ii) which, if adversely determined, individually or in the aggregate,
could not be reasonably expected to have a Material Adverse Effect on WHG and
the WHG Subsidiaries, taken as a whole.
Section 3.11 Compliance With Applicable Law.
(a) WHG and all WHG Subsidiaries hold all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective
businesses under, and have complied in all material respects with, applicable
laws, statutes, orders, rules or regulations of any federal, state or local
governmental authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any material
respect on the conduct of their respective businesses.
(b) Except as disclosed in WHG DISCLOSURE SCHEDULE 3.11, neither WHG
nor any WHG Subsidiary has received any notification or communication from any
Regulatory Authority (i) asserting that WHG or any WHG Subsidiary is not in
material compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to WHG or any
WHG Subsidiary; (iii) requiring or threatening to require WHG or any WHG
Subsidiary, or indicating that WHG or any WHG Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of WHG or any WHG Subsidiary,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any manner the operations of WHG or any WHG Subsidiary, including
without limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither WHG nor any WHG
Subsidiary has consented to or entered into any currently effective Regulatory
Agreement, except as set forth in WHG DISCLOSURE SCHEDULE 3.11.
Section 3.12 ERISA/Employee Compensation.
(a) WHG DISCLOSURE SCHEDULE 3.12 includes a descriptive list of all
existing bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, phantom stock, severance, welfare and fringe
benefit plans, employment, severance and change in control agreements and all
other benefit practices, policies and arrangements maintained by WHG or any WHG
Subsidiary in which any employee or former employee, consultant or former
consultant or director or former director of WHG or any WHG Subsidiary
participates or to which any such employee, consultant or director is a party or
is otherwise entitled to receive benefits (the "Compensation and Benefit
Plans"). A true and correct copy of each Compensation and Benefit Plan has
previously been delivered to Baltimore County Bank and is attached to WHG
DISCLOSURE SCHEDULE 3.12(a). Neither WHG nor any of its Subsidiaries has any
commitment to create any additional Compensation and Benefit Plan or to modify,
change or renew any existing Compensation and Benefit Plan.
16
(b) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the Age
Discrimination in Employment Act, and any regulations or rules promulgated
thereunder, and all material filings, disclosures and notices required by ERISA,
the Code, the Age Discrimination in Employment Act and any other applicable law
have been timely made. Each Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension
Plan") and which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS, and WHG is not aware
of any circumstances which are reasonably likely to result in revocation of any
such favorable determination letter. There is no material pending or, to the
best knowledge of WHG and Heritage Bank, threatened action, suit or claim
relating to any of the Compensation and Benefit Plans (other than routine claims
for benefits). Neither WHG nor any WHG Subsidiary has engaged in a transaction,
or omitted to take any action, with respect to any Compensation and Benefit Plan
that would reasonably be expected to subject WHG or any WHG Subsidiary to a tax
or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA,
assuming for purposes of Section 4975 of the Code that the taxable period of any
such transaction expired as of the date hereof and subsequently expires as of
the day next preceding the Merger Effective Date.
(c) No liability under Title IV of ERISA has been incurred by WHG or
any WHG Subsidiary with respect to any Compensation and Benefit Plan which is
subject to Title IV of ERISA, or with respect to any "single-employer plan" (as
defined in Section 4001(a) of ERISA) ("WHG Pension Plan") currently or formerly
maintained by WHG, a WHG Subsidiary or any entity which is considered one
employer with WHG under Section 4001(b)(1) of ERISA or Section 414 of the IRC
(an "ERISA Affiliate") since the effective date of ERISA that has not been
satisfied in full, and, to their knowledge, no condition exists that presents a
material risk to WHG or any ERISA Affiliate of incurring a liability under such
Title. No WHG or WHG Subsidiary had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, as of the last day of
the most recent plan year ending prior to the date hereof; the fair market value
of the assets of each WHG Pension Plan exceeds the present value of the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) under such WHG Pension
Plan as of the end of the most recent plan year with respect to the WHG Pension
Plan ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such WHG Pension
Plan as of the date hereof; except as disclosed at Disclosure Schedule 3.12,
there is not currently pending with the PBGC any filing with respect to any
reportable event under Section 4043 of ERISA nor has any reportable event
occurred as to which a filing is required and has not been made (other than as
might be required with respect to this Agreement and the transactions
contemplated thereby). Neither WHG or a WHG Subsidiary nor any ERISA Affiliate
has contributed to any "multiemployer plan," as defined in Section 3(37) of
ERISA, on or after September 26, 1980. Except as set forth in WHG's Disclosure
Schedule 3.12, neither WHG, a WHG Subsidiary, nor any ERISA Affiliate, nor any
Compensation and Benefit Plan, including any WHG Pension Plan, nor any trust
created thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which WHG, a WHG Subsidiary, an ERISA Affiliate,
or any Compensation and Benefit Plan, including any WHG Pension Plan or any such
trust or any trustee or administrator thereof, could reasonably be expected to
be subject to either a civil liability or penalty
17
pursuant to Section 409, 502(i) or 502(l) of ERISA or a tax imposed pursuant to
Chapter 43 of the IRC.
(d) All material contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements to which WHG or any WHG Subsidiary is a party or a sponsor
have been timely made, and all anticipated contributions and funding obligations
are accrued monthly on WHG's consolidated financial statements. WHG and its
Subsidiaries have expensed and accrued as a liability the present value of
future benefits under each applicable Compensation and Benefit Plan for
financial reporting purposes as required by GAAP. Neither any Pension Plan nor
any ERISA Affiliate Plan has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of ERISA.
None of WHG, any of its Subsidiaries or any ERISA Affiliate (x) has provided, or
would reasonably be expected to be required to provide, security to any Pension
Plan or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code,
or (y) has taken any action, or omitted to take any action, that has resulted,
or would reasonably be expected to result, in the imposition of a Lien under
Section 412(n) of the Code or pursuant to ERISA.
(e) Except as set forth in WHG DISCLOSURE SCHEDULE 3.12(e), neither
WHG nor any WHG Subsidiary has any obligations to provide retiree health, life
insurance, disability insurance, or other retiree death benefits under any
Compensation and Benefit Plan, other than benefits mandated by Section 4980B of
the Code. There has been no communication to employees by WHG or any WHG
Subsidiary that would reasonably be expected to promise or guarantee such
employees retiree health, life insurance, disability insurance, or other retiree
death benefits.
(f) WHG and its Subsidiaries do not maintain any Compensation and
Benefit Plans covering foreign employees.
(g) With respect to each Compensation and Benefit Plan, if
applicable, Heritage Bank has provided or made available to Baltimore County
Bank copies of the: (A) trust instruments and insurance contracts; (B) two most
recent Forms 5500 filed with the IRS; (C) most recent actuarial report and
financial statement; (D) the most recent summary plan description; (E) most
recent determination letter issued by the IRS; (F) any Form 5310 or Form 5330
filed with the IRS; and (G) most recent participant benefits statements.
(h) Except as set forth in WHG DISCLOSURE SCHEDULE 3.12(h), the
consummation of the Merger will not, directly or indirectly (including, without
limitation, as a result of any termination of employment or service at any time
prior to or following the Merger Effective Date) (A) entitle any employee,
consultant or director to any payment or benefit (including severance pay,
change in control benefit, or similar compensation) or any increase in
compensation, (B) result in the vesting or acceleration of any benefits under
any Compensation and Benefit Plan or (C) result in any material increase in
benefits payable under any Compensation and Benefit Plan.
(i) WHG DISCLOSURE SCHEDULE 3.12(i) sets forth all salary
adjustments, employee and officer promotions, and changes to any Compensation
and Benefit Plan since September 30, 2001.
18
Section 3.13 Brokers, Finders and Financial Advisors.
Except for WHG's engagement of FinPro, Inc. in connection with
transactions contemplated by this Agreement, a copy of which engagement
agreement is attached to WHG DISCLOSURE SCHEDULE 3.13, neither WHG nor any WHG
Subsidiary, nor any of their respective officers, directors, employees or
agents, has employed any broker, finder or financial advisor in connection with
the transactions contemplated by this Agreement, or incurred any liability or
commitment for any fees or commissions to any such person in connection with the
transactions contemplated by this Agreement, which has not been reflected in the
WHG Financials.
Section 3.14 Environmental Matters.
(a)....With respect to WHG and each of the WHG Subsidiaries, and except
as set forth in WHG DISCLOSURE SCHEDULE 3.14:
(i) To its knowledge, each of WHG and its Subsidiaries are, and
have been, in substantial compliance with, and are not liable under, any
Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
WHG's knowledge, threatened, before any court, governmental agency or board or
other forum against it or any of the WHG Subsidiaries or any Participation
Facility (x) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at or on a site owned, leased or operated by it or any of the WHG Subsidiaries
or any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
WHG's knowledge threatened, before any court, governmental agency or board or
other forum relating to or against any Loan Property (or Heritage Bank in
respect of such Loan Property) (x) relating to alleged noncompliance (including
by any predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release into the environment of any Hazardous
Material, whether or not occurring at or on a site owned, leased or operated by
a Loan Property;
(iv) To WHG's knowledge, the properties currently owned or
operated by WHG or any of the WHG Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Hazardous Material other than as permitted under applicable Environmental Law;
(v) Neither WHG nor any of the WHG Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or request
for information from any federal, state, local or foreign governmental entity or
any third party indicating that it may be in violation of, or liable under, any
Environmental Law;
19
(vi) To WHG's knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by WHG or any of the WHG
Subsidiaries, and no underground storage tanks have been closed or removed from
any properties owned or operated by WHG or any of the WHG Subsidiaries or any
Participation Facility; and
(vii) To WHG's knowledge, during the period of (s) WHG's or any
of the WHG Subsidiaries' ownership or operation of any of their respective
current properties or (t) WHG's or any of the WHG Subsidiaries' participation in
the management of any Participation Facility, there has been no contamination by
or release of Hazardous Materials in, on, under or affecting such properties. To
WHG's knowledge, prior to the period of (x) WHG's or any of the WHG
Subsidiaries' ownership or operation of any of their respective current
properties or (y) WHG's or any of the WHG Subsidiaries' participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such properties.
(viii) WHG has not conducted any environmental studies during the
past ten years with respect to any properties owned or leased by it or any of
its Subsidiaries.
(b) "Loan Property" means any property in which the applicable party
(or a Subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property. "Participation Facility" means any facility in which the
applicable party (or a Subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property,
but only with respect to such property.
Section 3.15 Loan Portfolio.
(a) The allowance for possible losses reflected in WHG's statement of
condition at September 30, 2001 was, and the allowance for possible losses shown
on the balance sheets in WHG's Regulatory Reports for periods ending after
September 30, 2001 will be, adequate, as of the dates thereof, under GAAP.
(b) WHG DISCLOSURE SCHEDULE 3.15 sets forth a listing, as of January
31, 2002, by account, of: (A) all loans (including loan participations) of
Heritage Bank or any of the Heritage Bank Subsidiaries that have been
accelerated during the past twelve months; (B) all loan commitments or lines of
credit of Heritage Bank or any of the Heritage Bank Subsidiaries which have been
terminated by Heritage Bank or any of the Heritage Bank Subsidiaries during the
past twelve months by reason of a default or adverse developments in the
condition of the borrower or other events or circumstances affecting the credit
of the borrower; (C) all loans, lines of credit and loan commitments as to which
Heritage Bank or any of the Heritage Bank Subsidiaries has given written notice
of its intent to terminate during the past twelve months; (D) with respect to
all commercial loans (including commercial real estate loans), all notification
letters and other written communications from Heritage Bank or any of the
Heritage Bank Subsidiaries to any of their respective borrowers, customers or
other parties during the past twelve months wherein Heritage Bank or any of the
Heritage Bank Subsidiaries has requested or demanded that actions be taken to
correct existing defaults or facts or circumstances which may become defaults;
(E) each borrower,
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customer or other party which has notified Heritage Bank or any of the Heritage
Bank Subsidiaries during the past twelve months of, or has asserted against
Heritage Bank or any of the Heritage Bank Subsidiaries, in each case in writing,
any "lender liability" or similar claim, and, to the knowledge of Heritage Bank,
each borrower, customer or other party which has given Heritage Bank or any of
the Heritage Bank Subsidiaries any oral notification of, or orally asserted to
or against Heritage Bank or any of the Heritage Bank Subsidiaries, any such
claim; (F) all loans, (1) that are contractually past due 90 days or more in the
payment of principal and/or interest, (2) that are on non-accrual status, (3)
that as of the date of this Agreement are classified as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Watch list" or words of similar import, together with the
principal amount of and accrued and unpaid interest on each such Loan and the
identity of the obligor thereunder, (4) where the interest rate terms have been
reduced and/or the maturity dates have been extended subsequent to the agreement
under which the loan was originally created due to concerns regarding the
borrower's ability to pay in accordance with such initial terms, or (5) where a
specific reserve allocation exists in connection therewith, and (G) all assets
classified by WHG or any WHG Subsidiary as real estate acquired through
foreclosure or in lieu of foreclosure, including in-substance foreclosures, and
all other assets currently held that were acquired through foreclosure or in
lieu of foreclosure.
(c) All loans receivable (including discounts) and accrued interest
entered on the books of Heritage Bank arose out of bona fide arm's-length
transactions, were made for good and valuable consideration in the ordinary
course of Heritage Bank's or the appropriate Subsidiary's respective business,
and the notes or other evidences of indebtedness with respect to such loans
(including discounts) are true and genuine and are what they purport to be. To
the knowledge of Heritage Bank, the loans, discounts and the accrued interest
reflected on the books of Heritage Bank and the Heritage Bank Subsidiaries are
subject to no defenses, set-offs or counterclaims (including, without
limitation, those afforded by usury or truth-in-lending laws), except as may be
provided by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity. All such loans are owned by
Heritage Bank or the appropriate Subsidiary free and clear of any Liens.
(d) The notes and other evidences of indebtedness evidencing the
loans described in clause (c) above, and all pledges, mortgages, deeds of trust
and other collateral documents or security instruments relating thereto are, in
all material respects, valid, true and genuine, and what they purport to be.
Section 3.16 Information to be Supplied.
The information to be provided by WHG for inclusion in the Proxy
Statement will not, at the time the Proxy Statement is mailed to WHG
shareholders, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein not
misleading. The information supplied, or to be supplied, by WHG and Heritage
Bank for inclusion in the Applications will, at the time such documents are
filed with any Regulatory Authority, be accurate in all material aspects.
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Section 3.17 Related Party Transactions.
Except as disclosed in WHG DISCLOSURE SCHEDULE 3.17, neither WHG nor any
WHG Subsidiary is a party to any transaction (including any loan or other credit
accommodation) with any Affiliate of WHG. Except as disclosed in WHG DISCLOSURE
SCHEDULE 3.17, all such transactions (a) were made in the ordinary course of
business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectibility or present other unfavorable features. Except as set
forth on WHG DISCLOSURE SCHEDULE 3.17, no loan or credit accommodation to any
Affiliate of WHG or any WHG Subsidiary is presently in default or, during the
three year period prior to the date of this Agreement, has been in default or
has been restructured, modified or extended. Neither WHG nor any WHG Subsidiary
has been notified that principal and interest with respect to any such loan or
other credit accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by Heritage Bank or
WHG is inappropriate.
Section 3.18 Schedule of Termination Benefits.
WHG DISCLOSURE SCHEDULE 3.18 includes a schedule of all termination
benefits and related payments that would be payable to the individuals
identified thereon, under any and all employment agreements, special termination
agreements, supplemental executive retirement plans, deferred bonus plans,
deferred compensation plans, salary continuation plans, or any compensation
arrangement, or other pension benefit or welfare benefit plan maintained by WHG
or any WHG Subsidiary for the benefit of officers or directors of WHG or any WHG
Subsidiary (the "Benefits Schedule"), assuming their employment or service is
terminated as of March 31, 2002 and the Closing Date occurs as of such date. No
other individuals are entitled to benefits under any such plans.
Section 3.19 Deposits.
None of the deposits of Heritage Bank is a "brokered" deposit as defined
in 12 U.S. Code Section 1831f(g).
Section 3.20. Business Combination.
The Board of Directors of WHG have taken, or will take, the necessary
action by board resolution and otherwise to exempt BCSB and Baltimore County
Bank from the definition of "Interested Stockholder" and to exempt the Merger
under Article XIV of the WHG Articles of Incorporation, to the extent
applicable.
Section 3.21 Fairness Opinion.
WHG has received an opinion from FinPro, Inc. to the effect that,
subject to the terms, conditions and qualifications set forth therein, as of the
date thereof, the Merger Consideration to be received by the stockholders of WHG
pursuant to this Agreement is fair to such stockholders from a
22
financial point of view. Such opinion has not been amended or rescinded as of
the date of this Agreement.
Section 3.22 Risk Management Instruments.
All material interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management arrangements,
whether entered into for Heritage Bank's own account, or for the account of one
or more of its Subsidiaries or their customers (all of which are set forth in
WHG DISCLOSURE SCHEDULE 3.22), were entered into in accordance with prudent
business practices and in all material respects in compliance with all
applicable laws, rules, regulations and regulatory policies and with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of WHG or one of its
Subsidiaries, enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and is in full
force and effect. Neither WHG nor any of its Subsidiaries, nor to the Knowledge
of WHG any other party thereto, is in breach of any of its obligations under any
such agreement or arrangement in any material respect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
BALTIMORE COUNTY SAVINGS BANK
AND BCSB Bancorp
Baltimore County Bank and BCSB each represents and warrants to Heritage
Bank and WHG that the statements contained in this Article IV are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV), except
as set forth in the Baltimore County Bank Disclosure Schedules delivered to WHG
and Heritage Bank prior to the date hereof. Baltimore County Bank has made a
good faith effort to ensure that the disclosure on each schedule of the
Baltimore County Bank Disclosure Schedules corresponds to the section reference
herein. However, for purposes of the Baltimore County Bank Disclosure Schedules,
any item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant.
Section 4.01 Organization.
(a) BCSB is a corporation duly organized and validly existing under
the laws of the United States, and is duly registered as a savings and loan
holding company under the HOLA. BCSB has full corporate power and authority to
carry on its business as now conducted and is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on Baltimore County Bank.
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(b) Baltimore County Bank is a stock savings association duly
organized and validly existing under the laws of the United States. The deposits
of Baltimore County Bank are insured by the FDIC through the SAIF to the fullest
extent permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due by Baltimore County Bank. Each
other BCSB Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization.
(c) Baltimore County Bank is a member in good standing of the FHLB
of Atlanta and owns the requisite amount of stock therein.
(d) Prior to the date of this Agreement, Baltimore County Bank has
delivered to Heritage Bank true and correct copies of the charter and bylaws of
Baltimore County Bank and BCSB.
Section 4.02 Authority; No Violation.
(a) BCSB and Baltimore County Bank have full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by BCSB and Baltimore County Bank and the completion by BCSB and Baltimore
County Bank of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of BCSB and Baltimore County Bank and, no
other corporate proceedings on the part of BCSB or Baltimore County Bank other
than the incorporation of Interim are necessary to complete the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by BCSB and Baltimore County Bank and, subject to receipt of the
required approvals of Regulatory Authorities described in Section 4.03 hereof,
constitutes the valid and binding obligation of BCSB and Baltimore County Bank
enforceable against BCSB and Baltimore County Bank in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally.
(b) (A) The execution and delivery of this Agreement by BCSB and
Baltimore County Bank, (B) subject to receipt of approvals from the Regulatory
Authorities referred to in Section 4.03 hereof and WHG and Heritage Bank's
compliance with any conditions contained therein, the consummation of the
transactions contemplated hereby, and (C) compliance by BCSB and Baltimore
County Bank with any of the terms or provisions hereof will not (i) conflict
with or result in a breach of any provision of the charter or bylaws of BCSB,
Baltimore County Bank or any BCSB Subsidiary; (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to BCSB, Baltimore County Bank or any BCSB Subsidiary or any of their
respective properties or assets; or (iii) violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default), under, result in
the termination of, accelerate the performance required by, or result in a right
of termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of BCSB or
Baltimore County Bank under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other investment or obligation to which BCSB or Baltimore County Bank is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts, breaches or defaults
under clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a Material Adverse Effect on Baltimore County Bank or
BCSB.
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Section 4.03 Consents.
Except for consents, approvals, filings and registrations from or with
the OTS and compliance with any conditions contained therein, and the approval
of this Agreement by the shareholders of WHG, the filing of a such certificates
and other documents with the OTS as necessary, no consents or approvals of, or
filings or registrations with, any public body or authority are necessary, and
no consents or approvals of any third parties are necessary, or will be, in
connection with (a) the execution and delivery of this Agreement by BCSB and
Baltimore County Bank, and (b) the completion by BCSB and Baltimore County Bank
of the transactions contemplated hereby. BCSB has no reason to believe that (i)
any required consents or approvals will not be received or will be received with
conditions, limitations or restrictions unacceptable to it or which would
adversely impact BCSB's ability to complete the transactions contemplated by
this Agreement or that (ii) any public body or authority, the consent or
approval of which is not required or any filing with which is not required, will
object to the completion of the transactions contemplated by this Agreement.
Section 4.04 Compliance With Applicable Law.
(a) Baltimore County Bank, BCSB and each BCSB Subsidiary hold all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their businesses under, and have complied in all material respects
with, applicable laws, statutes, orders, rules or regulations of any federal,
state or local governmental authority relating to them, other than where such
failure to hold or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise have a
Material Adverse Effect on BCSB and its Subsidiaries taken as a whole.
(b) Except as set forth in Baltimore County Bank Disclosure SCHEDULE
4.04(b), neither BCSB nor Baltimore County Bank has received any notification or
communication from any Regulatory Authority (i) asserting that BCSB or any
Baltimore County Bank is not in compliance with any of the statutes, regulations
or ordinances which such Regulatory Authority enforces; (ii) threatening to
revoke any license, franchise, permit or governmental authorization which is
material to BCSB or Baltimore County Bank; (iii) requiring or threatening to
require BCSB or any BCSB Subsidiary, or indicating that BCSB or Baltimore County
Bank may be required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting or limiting, or
purporting to restrict or limit, in any manner the operations of BCSB or
Baltimore County Bank, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting, or purporting
to direct, restrict or limit, in any manner the operations of BCSB or Baltimore
County Bank, including without limitation any restriction on the payment of
dividends (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither BCSB nor Baltimore County Bank is a party to, nor has
consented to any Regulatory Agreement. The most recent regulatory rating given
to Baltimore County Bank as to compliance with the CRA is satisfactory or
better.
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Section 4.05 Information to be Supplied.
The information to be supplied by BCSB and Baltimore County Bank for
inclusion in the Proxy Statement will not, at the time the Proxy Statement is
mailed to WHG shareholders, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein not misleading. The information supplied, or to be supplied, by BCSB and
Baltimore County Bank for inclusion in the Applications will, at the time such
documents are filed with any Regulatory Authority, be accurate in all material
aspects.
Section 4.06 Financing.
As of the date hereof Baltimore County Bank has, and at the Merger
Effective Date, Baltimore County Bank will have, funds that are sufficient,
under all applicable legal and regulatory standards, and available to meet its
obligations under this Agreement and to consummate in a timely manner the
transactions contemplated hereby and thereby. Neither BCSB nor Baltimore County
Bank shall enter into any plan of reorganization or plan of merger with any
party to form a new parent corporation of either entity without such party
assuming all obligations of BCSB and Baltimore County Bank under this Agreement.
Section 4.07 BCSB Financials.
BCSB has made available to WHG the BCSB Financials. The BCSB Financials
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered by such statements, and (including the related
notes where applicable) fairly present the consolidated financial position,
results of operations and cash flows of BCSB and the BCSB Subsidiaries as of and
for the respective periods ending on the dates thereof, except as indicated in
the notes thereto.
Section 4.08 Litigation.
As of the date of execution of this Agreement, neither BCSB, nor any
BCSB Subsidiary, is a party to any, and there are no pending or, to BCSB's
Knowledge, threatened legal, administrative, arbitration or other proceedings,
claims (whether asserted or unasserted), actions or governmental investigations
or inquiries of any nature challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or which could adversely affect the
ability of BCSB to perform under this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of Heritage Bank's Business.
(a) From the date of this Agreement to the Closing Date, WHG and
each WHG Subsidiary will conduct their business and engage in transactions,
including extensions of credit, only in the ordinary course and consistent with
past practice and policies, except as otherwise required or contemplated by this
Agreement or with the written consent of Baltimore County Bank
26
(which consent will not be unreasonably withheld or delayed), WHG and each of
the Heritage Bank Subsidiaries will use its reasonable good faith efforts, to
(i) preserve their business organizations intact, (ii) maintain good
relationships with employees, and (iii) preserve for themselves the good will of
their customers and others with whom business relationships exist. From the date
hereof to the Closing Date, except as otherwise consented to or approved by BCSB
in writing (which approval will not be unreasonably withheld or delayed) or as
contemplated or required by this Agreement, WHG and Heritage Bank will not, and
WHG will not permit any WHG Subsidiary to:
(i) amend or change any provision of its articles of
incorporation, charter, or bylaws;
(ii) except as required by the WHG Stock Option Plans and MSBP,
and as may be required by legally binding commitments existing on the date
hereof as set forth in WHG Disclosure Schedule 5.01(a)(ii), change the number of
authorized or issued shares of its capital stock or issue or grant any right or
agreement of any character relating to its authorized or issued capital stock or
any securities convertible into shares of such stock, or split, combine or
reclassify any shares of capital stock, or declare, set aside or pay any
dividend or other distribution in respect of capital stock, other than the
quarterly cash dividend of $0.09 per share payable by WHG, with payment and
record dates consistent with past practice. In addition, if the Closing Date is
more than forty-five (45) days after the next preceding WHG dividend payment
date, WHG may declare and pay a final cash dividend at the quarterly rate of
$0.09 per share, with the exact amount per share to be an amount that is pro
rated through the payment date from the preceding payment date;
(iii) except as set forth in WHG DISCLOSURE SCHEDULE 5.11, grant
or agree to pay any bonus, severance or termination to, or enter into or amend
any employment agreement, severance agreement, supplemental executive agreement,
or similar agreement or arrangement with any of its directors, officers or
employees, or increase in any manner the compensation or fringe benefits of any
employee, officer or director, except for normal increases in the ordinary
course of business consistent with past practice, and except as may be required
pursuant to legally binding commitments existing on the date hereof and set
forth on WHG DISCLOSURE SCHEDULES 3.08 and 3.12;
(iv) enter into or, except as may be required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation right,
stock grant, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or employees; or
make any contributions to any defined contribution or defined benefit plan not
in the ordinary course of business consistent with past practice; or materially
amend any Compensation and Benefit Plan except to the extent such modifications
or amendments do not result in an increase in cost;
(v) merge or consolidate WHG or any WHG Subsidiary with any other
corporation; sell or lease all or any substantial portion of the assets or
business of WHG or any WHG Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in connection with
foreclosures, settlements in lieu of foreclosure, troubled loan or debt
restructuring, or the collection
27
of any loan or credit arrangement between WHG, or any WHG Subsidiary, and any
other person; enter into a purchase and assumption transaction with respect to
deposits and liabilities; permit the revocation or surrender by any WHG
Subsidiary of its certificate of authority to maintain, or file an application
for the relocation of, any existing branch office, or file an application for a
certificate of authority to establish a new branch office;
(vi) sell or otherwise dispose of the capital stock of WHG or any
WHG Subsidiary or sell or otherwise dispose of any asset of WHG or of any WHG
Subsidiary other than in the ordinary course of business consistent with past
practice; subject any asset of WHG or of any WHG Subsidiary to a lien, pledge,
security interest or other encumbrance (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "federal
funds" and the satisfaction of legal requirements in the exercise of trust
powers) other than in the ordinary course of business consistent with past
practice; incur any indebtedness for borrowed money (or guarantee any
indebtedness for borrowed money), except in the ordinary course of business
consistent with past practice;
(vii) take any action which would result in any of the
representations and warranties of WHG or Heritage Bank set forth in this
Agreement becoming untrue as of any date after the date hereof or in any of the
conditions set forth in Article VI hereof not being satisfied, except in each
case as may be required by applicable law;
(viii) change any method, practice or principle of accounting,
except as may be required from time to time by GAAP (without regard to any
optional early adoption date) or any Regulatory Authority responsible for
regulating WHG or Heritage Bank;
(ix) waive, release, grant or transfer any material rights of
value or modify or change in any material respect any existing material
agreement or indebtedness to which WHG or any WHG Subsidiary is a party, other
than in the ordinary course of business, consistent with past practice;
(x) purchase any security for its investment portfolio not rated
"A" or higher by either Standard & Poor's Corporation or Xxxxx'x Investor
Services, Inc. or otherwise alter, in any material respect, the mix, maturity,
credit or interest rate risk profile of its portfolio of investment securities
or its portfolio of mortgage-backed securities;
(xi) purchase any security with a remaining term to maturity
greater than three years;
(xii) make any new loan or other credit facility commitment
(including without limitation, lines of credit and letters of credit) to any
borrower or group of affiliated borrowers in excess of $400,000 in the
aggregate, or increase, compromise, extend, renew or modify any existing loan or
commitment outstanding in excess of $500,000, except for any commitment
disclosed on the WHG DISCLOSURE SCHEDULE 5.01(a)(xi);
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(xiii) except as set forth on the WHG DISCLOSURE SCHEDULE
5.01(a)(xii), enter into, renew, extend or modify any other transaction with any
Affiliate;
(xiv) enter into any futures contract, option, interest rate
caps, interest rate floors, interest rate exchange agreement or other agreement
or take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xv) except for the execution of this Agreement and the documents
related to this Agreement take any action that would give rise to a right of
payment to any individual under any employment agreement, or take any action
that would give rise to a right of payment to any individual under any
Compensation and Benefit Plan;
(xvi) make any change in policies with regard to the extension of
credit, the establishment of reserves with respect to the possible loss thereon
or the charge off of losses incurred thereon, investment, asset/liability
management or other material banking policies in any material respect except as
may be required by changes in applicable law or regulations or in GAAP and
except as may be necessitated in the reasonable opinion of WHG or Heritage Bank
due to changes in interest rates, and in accordance with safe and sound banking
practices;
(xvii) except as set forth in WHG DISCLOSURE SCHEDULE 5.01(xix),
make any capital expenditures in excess of $25,000 individually or $50,000 in
the aggregate, other than pursuant to binding commitments existing on the date
hereof and other than expenditures necessary to maintain existing assets in good
repair;
(xviii)purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the ordinary
course of business consistent with past practices and policies;
(xix) undertake or enter into any lease, contract or other
commitment for its account, other than in the normal course of providing credit
to customers as part of its banking business, involving a payment by WHG or any
WHG Subsidiary of more than $25,000 annually, or containing a material financial
commitment and extending beyond 12 months from the date hereof;
(xx) sell any REO or loan, or capitalize any further expenses
relating to REO; or
(xxi) agree to do any of the foregoing.
Section 5.02 Access; Confidentiality
(a) Heritage Bank shall permit Baltimore County Bank and its
representatives reasonable access to its properties during normal business
hours, and shall disclose and make available to them all books, papers and
records relating to the assets, properties, operations, obligations and
liabilities of Heritage Bank, including, but not limited to, all books of
account (including the general ledger), tax records, minute books of meetings of
boards of directors (and any committees thereof)(other than
29
minutes of any confidential discussion of this Agreement and the transactions
contemplated hereby), and stockholders, organizational documents, bylaws,
material contracts and agreements, filings with any Regulatory Authority,
accountants' work papers, litigation files, except as necessary to preserve any
attorney/client privilege, plans affecting employees, and any other business
activities or prospects in which BCSB may have a reasonable interest. Heritage
Bank shall make its officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with Baltimore County Bank and its representatives. WHG and Heritage
Bank shall each permit a representative of Baltimore County Bank to attend any
meeting of its Board of Directors or the Executive Committees thereof (provided
that neither WHG nor Heritage Bank shall be required to permit the Baltimore
County Bank representative to remain present during any confidential discussion
of the Agreement and the transactions contemplated thereby). The parties will
hold all such information delivered in confidence to the extent required by, and
in accordance with, the provisions of the confidentiality agreement, dated
January 7, 2002, between FinPro, Inc., on behalf of Heritage Bank, and BCSB (the
"Confidentiality Agreement"). Heritage Bank shall permit Baltimore County Bank,
at Baltimore County Bank's sole expense, to cause a "phase I environmental
audit" and a "phase II environmental audit" to be performed at any physical
location owned or occupied by Heritage Bank, provided that any phase I
environmental audit is contracted for within thirty days of the date of this
Agreement and commenced as soon as practicable thereafter.
(b) BCSB agrees to conduct such investigations and discussions
hereunder in a manner so as not to interfere unreasonably with normal operations
and customer and employee relationships of the other party.
(c) In addition to the access permitted by subparagraph (a) above,
from the date of this Agreement through the Closing Date, Heritage Bank and each
WHG Subsidiary shall permit employees of Baltimore County Bank reasonable access
to information relating to problem loans, loan restructurings and loan work-outs
of Heritage Bank.
(d) If the transactions contemplated by this Agreement shall not be
consummated, Heritage Bank and Baltimore County Bank will each destroy or return
all documents and records obtained from the other party or its representatives
during the course of its investigation and will cause all information with
respect to the other party obtained pursuant to this Agreement or preliminarily
thereto to be kept confidential, except to the extent such information becomes
public through no fault of the party to whom the information was provided or any
of its representatives or agents and except to the extent disclosure of any such
information is legally required. Heritage Bank and Baltimore County Bank shall
each give prompt written notice to the other party of any contemplated
disclosure where such disclosure is so legally required.
Section 5.03 Regulatory Matters and Consents.
(a) Except for the WHG Proxy Statement, BCSB and Baltimore County
Bank will prepare all Applications and make all filings for, and use their best
efforts to obtain as promptly as practicable after the date hereof, all
necessary permits, consents, approvals, waivers and authorizations of all
Regulatory Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement.
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(b) Heritage Bank will furnish Baltimore County Bank with all
information concerning Heritage Bank and the Heritage Bank Subsidiaries as may
be necessary or advisable in connection with any Application or filing made by
or on behalf of Baltimore County Bank or BCSB to any Regulatory Authority in
connection with the transactions contemplated by this Agreement.
(c) Baltimore County Bank, BCSB and WHG, and Heritage Bank will
promptly furnish each other with copies of all material written communications
to, or received by them from any Regulatory Authority in respect of the
transactions contemplated hereby, except information that is filed by either
party, which is designated, as confidential.
(d) The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Regulatory Authorities. Baltimore County
Bank and BCSB will furnish WHG and Heritage Bank with (i) copies of all
Applications prior to filing with any Regulatory Authority and provide Heritage
Bank a reasonable opportunity to provide changes to such Applications and (ii)
copies of all Applications filed.
(e) Heritage Bank, WHG, Baltimore County Bank and BCSB will
cooperate with each other in the foregoing matters and will furnish the
responsible party with all information concerning it and its Subsidiaries as may
be necessary or advisable in connection with any Application or filing
(including the Proxy Statement) made by or on behalf of Baltimore County Bank,
BCSB, WHG or Heritage Bank to any Regulatory Authority in connection with the
transactions contemplated by this Agreement, and such information will be
accurate and complete in all material respects. In connection therewith, each
party will provide certificates and other documents reasonably requested by the
other.
Section 5.04 Taking of Necessary Action.
(a) Baltimore County Bank, BCSB, WHG and Heritage Bank shall each use
its best efforts in good faith, and each of them shall cause its Subsidiaries to
use their best efforts in good faith, to (i) furnish such information as may be
required in connection with the preparation of the documents referred to in
Section 5.03 of this Agreement, and (ii) take or cause to be taken all action
necessary or desirable on its part using its best efforts so as to permit
completion of the Merger and the transactions contemplated by this Agreement,
including, without limitation, (A) obtaining the consent or approval of each
individual, partnership, corporation, association or other business or
professional entity whose consent or approval is required or desirable for
consummation of the transactions contemplated hereby (including assignment of
leases without any change in terms), provided that neither WHG nor any WHG
Subsidiary shall agree to make any payments or modifications to agreements in
connection therewith without the prior written consent of Baltimore County Bank,
and (B) requesting the delivery of appropriate opinions, consents and letters
from its counsel and independent auditors. No party hereto shall take, or cause,
or to the best of its ability permit to be taken, any action that would
substantially impair the prospects of completing the Merger pursuant to this
Agreement, except for the exercise of its rights under this Agreement.
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(b) WHG shall prepare, subject to the review, and consent of BCSB
with respect to matters relating to Baltimore County Bank and BCSB, a Proxy
Statement to be mailed to the shareholders of WHG in connection with the
meetings of its shareholders and transactions contemplated hereby, which Proxy
statement shall conform to all applicable legal requirements. The parties shall
cooperate with each other with respect to the preparation of the Proxy
Statement. WHG shall, as promptly as practicable following the preparation
thereof, file the Proxy Statement with the SEC, and WHG shall use all reasonable
efforts to have the Proxy Statement mailed to stockholders as promptly as
practicable after such filing. WHG will promptly advise BCSB of the time when
the Proxy Statement has been filed and mailed, or of any comments from the SEC
or any request by the SEC for additional information.
Section 5.05 Certain Agreements.
(a) For a period of six years from and after the Merger Effective
Date, BCSB shall, to the fullest extent permitted to it under applicable law,
indemnify, defend and hold harmless each present and former director and officer
of WHG (the "Indemnified Parties") against all losses, claims, damages, costs,
expenses (including reasonable attorneys' fees and expenses), liabilities,
judgments or amounts paid in settlement (with the prior written approval of
BCSB, which approval shall not be unreasonably withheld) or in connection with
any claim, action, suit, proceeding or investigation arising out of matters
existing or occurring at or prior to the Merger Effective Date (a "Claim") in
which an Indemnified Party is, or is threatened to be made, a party or a witness
based in whole or in part on, or arising in whole or in part out of, the fact
that such person is or was a director or officer of WHG or any WHG Subsidiary,
regardless of whether such Claim is asserted or claimed prior to, at or after
the Closing Date, to the fullest extent to which directors and officers of WHG
would have been entitled under WHG's articles of incorporation and applicable
federal law and regulations. All rights to indemnification in respect of a Claim
asserted or made within the period described in the preceding sentence shall
continue until the final disposition of such Claim.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.05, upon learning of any Claim, shall promptly notify BCSB, but the
failure to so notify shall not relieve BCSB of any liability it may have to such
Indemnified Party except to the extent that such failure prejudices BCSB. In the
event of any Claim, (i) BCSB shall have the right to assume the defense thereof
(with counsel reasonably satisfactory to the Indemnified Party) and shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that, if BCSB elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between BCSB and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
BCSB shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received, provided
further that BCSB shall in all cases be obligated pursuant to this paragraph to
pay for only one firm of counsel for all Indemnified Parties, (ii) the
Indemnified Parties will cooperate in the defense of any such Claim and (iii)
BCSB shall not be liable for any settlement effected without its prior written
consent (which consent shall not unreasonably be withheld).
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(c) In the event BCSB or any of is successors or assigns (i)
consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of BCSB assume the obligations set forth in this Section
5.05.
(d) BCSB shall maintain in effect for three years from the Closing
Date, if available, the current directors' and officers' liability insurance
policy maintained by WHG (provided that BCSB may substitute therefor policies of
at least the same coverage containing terms and conditions which are not
materially less favorable) with respect to matters occurring at or prior to the
Closing Date, provided, however, that in no event shall BCSB be required to
expend pursuant to this Section 5.05(d) more than an amount equal to 150% of the
current annual amount expended by Heritage Bank to maintain or procure insurance
coverage pursuant hereto (which amount, if applicable, shall be used to maintain
the directors' and officers' liability insurance policy for such period less
than three years as is available for such payment). In connection with the
foregoing, WHG agrees to provide such insurer or substitute insurer with such
representations as such insurer may reasonably request with respect to the
reporting of any prior claims. WHG DISCLOSURE SCHEDULE 5.05(d) sets forth all
claims made or notices provided to WHG's present insurers and the extent to
which any present insurance coverage has been impaired due to either defense
expense or settlements.
(e) The provisions of this Section 5.05 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 5.06 No Other Bids and Related Matters.
From and after the date hereof until the termination of this Agreement,
neither WHG, nor any WHG Subsidiary, nor any of their respective officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by WHG or any
of its Subsidiaries), will, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information or
assistance), or facilitate knowingly, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its officers, directors, or
employees or any of its subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative retained by any of its
subsidiaries to take any such action, and WHG shall notify BCSB orally (within
one business day) and in writing (as promptly as practicable) of all of the
relevant details relating to all inquiries and proposals which it or any of its
Subsidiaries or any such officer, director, employee, investment banker,
financial advisor, attorney, accountant or other representative may receive
relating to any of such matters, provided, however, that nothing contained in
this Section 5.06 shall prohibit the Board of Directors of WHG from (i)
furnishing information to, or entering into discussions or negotiations with any
person or entity that makes an unsolicited written, bona fide proposal to
acquire WHG pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and only
to the extent that, (A) the Board of Directors of WHG receives an opinion
33
from its independent financial advisor that such proposal may be superior to the
Merger from a financial point-of-view to WHG's stockholders, (B) the Board of
Directors of WHG, after consultation with and after considering the advice of
independent legal counsel, determines in good faith that failure to take such
action may cause the Board of Directors of WHG to breach its fiduciary duties to
stockholders under applicable law (such proposal that satisfies (A) and (B)
being referred to herein as a "Superior Proposal"); and (C) WHG promptly
notifies BCSB of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with WHG or any of its representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any inquiries, proposals or offers. For purposes of this
Agreement, "Acquisition Proposal" shall mean any proposal or offer as to any of
the following (other than the transactions contemplated hereunder) involving WHG
or any of its subsidiaries: (i) any merger, consolidation, share exchange,
business combination, or other similar transactions; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of the
assets of WHG, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 25% or more of the
outstanding shares of capital stock of WHG or the filing of a registration
statement under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
Section 5.07 Duty to Advise; Duty to Update Heritage Bank's Disclosure
Schedules
WHG shall promptly advise BCSB of any change or event having a Material
Adverse Effect on it or on any WHG Subsidiary or which it believes would or
would be reasonably likely to cause or constitute a material breach of any of
its representations, warranties or covenants set forth herein. WHG and Heritage
Bank shall update their DISCLOSURE SCHEDULES as promptly as practicable after
the occurrence of an event or fact that, if such event or fact had occurred
prior to the date of this Agreement, would have been disclosed in the WHG
DISCLOSURE SCHEDULES. The delivery of such updated Schedule shall not relieve
WHG or Heritage Bank from any breach or violation of this Agreement and shall
not have any effect for the purposes of determining the satisfaction of the
condition set forth in Sections 6.02(c) hereof. BCSB and Baltimore County Bank
shall update their DISCLOSURE SCHEDULES as promptly as practicable after the
occurrence of an event or fact that, if such event or fact had occurred prior to
the date of this Agreement, would have been disclosed in the Baltimore County
Bank DISCLOSURE SCHEDULES. The delivery of such updated Schedule shall not
relieve Baltimore County Bank from any breach or violation of this Agreement and
shall not have any effect for the purposes of determining the satisfaction of
the condition set forth in Section 6.01(c) hereof. Baltimore County Bank shall
promptly advise WHG of any change or event that it believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants set forth herein.
Section 5.08 Conduct of Baltimore County Bank's Business.
From the date of this Agreement to the Closing Date, Baltimore County
Bank will use its best efforts to (x) preserve its business organizations
intact, (y) maintain good relationships with employees, and (z) preserve for
itself the goodwill of customers of Baltimore County Bank. From the date of this
Agreement to the Closing Date, neither BCSB nor Baltimore County Bank will (i)
amend its certificate of incorporation, charter or bylaws in any manner
inconsistent with the prompt
34
and timely consummation of the transactions contemplated by this Agreement, (ii)
take any action which would result in any of the representations and warranties
of BCSB or Baltimore County Bank set forth in this Agreement becoming untrue as
of any date after the date hereof or in any of the conditions set forth in
Article VI hereof not being satisfied, except in each case as may be required by
applicable law; (iii) take any action which would or is reasonably likely to
adversely effect or materially delay the receipt of the necessary approvals from
the Regulatory Authorities; (iv) take action which would or is reasonably likely
to materially and adversely affect Baltimore County Bank or BCSB's ability to
perform their covenants and agreements under this Agreement; or (v) agree to do
any of the foregoing.
Section 5.09 Board and Committee Minutes.
WHG and Heritage Bank shall provide to Baltimore County Bank, within
thirty (30) days after any meeting of their respective Board of Directors, or
any executive committee thereof, a copy of the minutes of such meeting,
excluding any matters related to this Agreement or the transactions contemplated
hereby, except that with respect to any meeting held within thirty (30) days of
the Closing Date, such minutes shall be provided to each party prior to the
Closing Date.
Section 5.10 Undertakings by the Parties.
(a) From and after the date of this Agreement:
(i) Voting by Directors. Concurrent with the execution of this
Agreement, the Directors of WHG shall have entered into and delivered to BCSB
the agreement set forth as Exhibit A to this Agreement;
(ii) Systems Conversions. Heritage Bank and Baltimore County Bank
shall meet on a regular basis to discuss and plan for the conversion of Heritage
Bank's data processing and related electronic informational systems to those
used by Baltimore County Bank, which planning shall include, but not be limited
to, discussion of the possible termination by Heritage Bank of third-party
service provider arrangements effective at the Merger Effective Date or at a
date thereafter, non-renewal of personal property leases and software licenses
used by Heritage Bank in connection with its systems operations, retention of
outside consultants and additional employees to assist with the conversion, and
outsourcing, as appropriate, of proprietary or self-provided system services, it
being understood that Heritage Bank shall not be obligated to take any such
action prior to the Merger Effective Date and, unless Heritage Bank otherwise
agrees, no conversion shall take place prior to the Merger Effective Date. In
the event that Heritage Bank takes, at the request of Baltimore County Bank, any
action relative to third parties to facilitate the conversion that results in
the imposition of any termination fees or charges, Baltimore County Bank shall
indemnify Heritage Bank for any such fee and charges, and the costs of reversing
the conversion process, if for any reason the Bank Merger is not consummated for
any reason other than a breach of this Agreement by Heritage Bank, or a
termination of this Agreement under Section 7.01(c)(iv) or (d)(iv).
(iii) List of Nonperforming Assets and Lending Activities.
Heritage Bank shall provide Baltimore County Bank, within ten (10) days of the
end of each calendar month, a written list (which shall include the outstanding
principal amount of the loan, where applicable) of the
35
following: (i) loans on nonaccrual, (ii) real estate owned, (iii) all loans
delinquent sixty (60) days or more as to principal or interest as of the end of
such month and (iv) and impaired loans. Also within twenty (20) days of the end
of each calendar month, Heritage Bank shall also provide Baltimore County Bank
with a status report on each loan with an unpaid principal balance of $500,000
or more. On a monthly basis, Heritage Bank shall provide Baltimore County Bank
with a listing of all loan approvals, which listing shall indicate the loan
amount, loan type and other material features of the loan.; and
(iv) Reserves and Merger-Related Costs. On or immediately before
the Effective Date, and at the request of Baltimore County Bank and to the
extent not inconsistent with GAAP, WHG shall establish such additional accruals
and reserves as may be necessary to conform the accounting reserve practices and
methods (including credit loss practices and methods) of WHG to those of BCSB
(as such practices and methods are to be applied to WHG from and after the
Closing Date) and BCSB's plans with respect to the conduct of the business of
WHG and Heritage Bank following the Merger and otherwise to reflect
Merger-related expenses and costs incurred by WHG and Heritage Bank, provided,
however, that WHG shall not be required to take such action unless Baltimore
County Bank and BCSB agree in writing that all conditions to closing set forth
in Section 6.02 have been satisfied or waived (except for the expiration of any
applicable waiting periods); and no accrual or reserve made by WHG or any WHG
Subsidiary pursuant to this subsection, or any litigation or regulatory
proceeding arising out of any such accrual or reserve, shall constitute or be
deemed to be a breach or violation of any representation, warranty, covenant,
condition or other provision of this Agreement or to constitute a termination
event within the meaning of Section 7.01(b) hereof.
(v) Shareholders Meeting. Subject to delays, if any, which may be
occasioned by the review of proxy materials by a Regulatory Authority, WHG shall
submit this Agreement to its shareholders for approval at a meeting to be held
within 90 days of the date of this Agreement, or as soon thereafter as is
practicable, and, if consistent with its fiduciary obligation at the time and
subject to Section 5.06, its Board of Directors shall recommend approval of this
Agreement to the WHG shareholders.
(b) From and after the date of this Agreement, Baltimore County Bank,
BCSB, WHG and Heritage Bank shall each:
(i) Filings and Approvals. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the Applications, (B) the
Proxy Statement, (C) all other documents necessary to obtain any other approvals
and consents required to effect the completion of the Merger, and the
transactions contemplated by this Agreement, (D) all other documents
contemplated by this Agreement;
(ii) Public Announcements. Cooperate and cause their respective
officers, directors, employees and agents to cooperate in good faith, consistent
with their respective legal obligations, in the preparation and distribution of,
and agree upon the form and substance of, any press release related to this
Agreement and the transactions contemplated hereby, and any other public
disclosures related thereto, including without limitation communications to
shareholders,
36
internal announcements and customer disclosures, but nothing contained herein
shall prohibit either party from making any disclosure which its counsel deems
necessary, provided that the disclosing party notifies the other party
reasonably in advance of the timing and contents of such disclosure;
(iii) Maintenance of Insurance. Maintain, and cause their
respective Subsidiaries to maintain, insurance in such amounts as are reasonable
to cover such risks as are customary in relation to the character and location
of its properties and the nature of its business;
(iv) Maintenance of Books and Records. Maintain, and cause their
respective Subsidiaries to maintain, books of account and records in accordance
with GAAP applied on a basis consistent with those principles used in preparing
the financial statements heretofore delivered; or
(v) Taxes. File all federal, state, and local tax returns
required to be filed by them or their respective Subsidiaries on or before the
date such returns are due (including any extensions) and pay all taxes shown to
be due on such returns on or before the date such payment is due.
Section 5.11 Employee and Termination Benefits.
(a) As of or after the Merger Effective Date, and at Baltimore County
Bank's election and subject to the requirements of the Code and ERISA, the
Heritage Bank Compensation and Benefit Plans, other than ESOP, which will be
terminated, may be continued and maintained separately, consolidated, or
terminated. Heritage Bank employees who continue employment with Baltimore
County Bank following the Merger Effective Date ("Continuing Employees") shall
participate in all Baltimore County Bank Employee Plans (including, without
limitation, Baltimore County Bank's defined benefit pension plan, ESOP, and its
401(k) plan) as of the first entry date coincident with or following the Merger
Effective Date, with recognition of prior service with Heritage Bank for
purposes of eligibility to participate and vesting, but not benefits accrual.
Continuing Employees shall be enrolled in the Baltimore County Bank
medical, dental, life insurance and disability insurance programs available to
other Baltimore County employees immediately upon the termination of the
Heritage Bank plans without such Continuing Employees incurring any uninsured
waiting periods or pre-existing conditions exclusions for such Continuing
Employees and dependents participating in such similar Heritage Bank plans at
such time. Further, any plan year deductibles under such plans incurred as of
the date of termination of the respective Heritage Bank plans shall be credited
to the first plan year deductibles under the comparable Baltimore County plans
upon enrollment in such Baltimore County plans.
(b) At and for a period of six months following the Merger Effective
Date, any terminated employees of WHG or Heritage Bank whose employment is
terminated, other than voluntary termination and termination for cause, shall be
provided with severance benefits equal to two (2) weeks pay for every year of
service with WHG or Heritage Bank, up to a maximum of 26 weeks. The benefit set
forth in this section 5.11(b) shall be payable to any person who is an employee
of WHG or Heritage Bank five business days prior to the Merger Effective Date
(other than an employee who is a party to an employment or change in control
agreement) and whose employment is terminated by Baltimore County Bank (other
than voluntary termination and
37
termination for cause) during the period ending six months after the Merger
Effective Date. The benefits shall be payable within 14 days of the date of
termination of employment.
(c) The employment agreements identified in WHG DISCLOSURE SCHEDULE 3.18
will be honored by Baltimore County Savings Bank. The payments required to be
made under those agreements are set forth in WHG DISCLOSURE SCHEDULE 3.18 (which
payment shall be made by Heritage Bank, or if requested by Baltimore County
Bank, by Baltimore County Bank) shall be in complete satisfaction of all of
their rights under the employment agreement, neither BCSB, Baltimore County
Bank, WHG nor Heritage Bank shall have further obligation under the employment
agreements, and each individual shall execute a cancellation agreement and
release, in form and substance reasonably satisfactory to Baltimore County Bank
in connection with such payment. To the extent that BCSB has notified WHG prior
to the Merger Effective Date that employees with employment agreements or change
in control severance agreements will not be retained by BCSB or Baltimore County
Bank after the Merger Effective Date, then WHG shall make such termination
payments in accordance with such agreements as of the Merger Effective Date
(which payments, at the request of Baltimore County Bank, may be made by
Baltimore County Bank).
(d) The Heritage Bank Employee Stock Ownership Plan (the "ESOP") shall
be terminated as of the Merger Effective Date in accordance with its terms in
effect as of the date of this Agreement (all shares held by the ESOP shall be
converted into the right to receive the Merger Consideration), all outstanding
ESOP indebtedness shall be repaid, and the balance shall be allocated and
distributed to WHG employees (subject to the receipt of a determination letter
from the IRS to be filed by WHG promptly following the date of this Agreement),
as provided for in the WHG ESOP and unless otherwise required by applicable law;
provided, however, in the event that the Merger Effective Date is prior to July
31, 2002, Heritage Bank may, to the extent permitted under the Code, make
contributions to the ESOP in an amount equal to the normal contribution amount
for the complete twelve month plan year as if the Merger Effective Date was July
31, 2002.
(e) As of the Closing Date, payments may be made to the directors, and
in the amounts, specified in WHG DISCLOSURE SCHEDULE 5.11(e), pursuant to the
Heritage Bank Directors Change in Control Severance Plan. The Chairman of the
Board of WHG shall be provided with a six-month severance benefit in the amount
set forth on the WHG DISCLOSURE SCHEDULE 5.11(e) in addition to his Board
severance benefit pursuant to the Heritage Bank Directors Change in Control
Severance Plan.
(f) On or before the Merger Effective Date, all Heritage Bank employees
shall be paid for all accrued (consistent with past practice) but unused
vacation leave determined as of such Merger Effective Date, and may also receive
payments in accordance with the Heritage Bank Employee Retention Program in
accordance with WHG DISCLOSURE SCHEDULE 5.11(f), provided that Heritage Bank has
been accruing for such payments prior to the date of this Agreement (and in such
case such accruals may continue through the Closing Date, consistent with
current practice).
(g) Heritage Bank may continue to accrue for contributions to be made to
its 401(k) plan at the annual rate of 5% of participant compensation through the
Merger Effective Date and may
38
make such contribution to such plan not later than the Merger Effective Date;
provided, however, in the event that the Merger Effective Date is prior to July
31, 2002, Heritage Bank may, to the extent permitted under the Code, make a
contribution to such 401(k) plan in an amount equal to the 5% contribution
projected for such final plan year as if the Merger Effective Date was as of
July 31, 2002.
(h) Heritage Bank shall continue to accrue for its annual bonus plan
(consistent with past practice) and may pay such bonus amounts as of the Merger
Effective Time in accordance with WHG Disclosure Schedule 5.11(h).
Section 5.1 Duty to Advise; Duty to Update Baltimore County Bank's
Disclosure Schedules.
BCSB and Baltimore County Bank shall promptly advise Heritage Bank of
any change or event having a Material Adverse Effect on it or on any BCSB
Subsidiary or which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants set forth herein. BCSB and Baltimore County Bank shall update their
DISCLOSURE SCHEDULES as promptly as practicable after the occurrence of an event
or fact which, if such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in a DISCLOSURE SCHEDULE. The delivery of
such updated Schedules shall not relieve BCSB from any breach or violation of
this Agreement and shall not have any effect for the purposes of determining the
satisfaction of the condition set forth in Sections 6.01(c) hereof.
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to WHG and Heritage Bank's Obligations under
this Agreement.
The obligations of WHG and Heritage Bank hereunder shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by WHG and Heritage Bank pursuant to Section 8.03
hereof:
(a) Corporate Proceedings. All action required to be taken by, or on the
part of, BCSB and Baltimore County Bank to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated by this Agreement, shall have been duly and validly taken by BCSB
and Baltimore County Bank; and Heritage Bank and WHG shall have received
certified copies of the resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of BCSB and Baltimore
County Bank required by this Agreement to be performed by BCSB and Baltimore
County Bank at or prior to the Closing Date shall have been duly performed and
complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of BCSB and Baltimore County Bank set forth in this Agreement which
is qualified as to materiality shall be true and correct and each such
representational warranty that is not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement, and as of
the Closing Date as though made on and as of the Closing
39
Date (other than Section 4.08 and except as to any representation or warranty
which specifically relates to an earlier date);
(d) Approvals of Regulatory Authorities. The parties to this Agreement
shall have received all required approvals from the Regulatory Authorities with
respect to the Mergers; and all notice and waiting periods required thereunder
shall have expired or been terminated;
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction that enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) Approval of WHG's Shareholders. This Agreement shall have been
approved by the shareholders of WHG by such vote as is required under applicable
law, and WHG's articles of incorporation and bylaws;
(g) Officer's Certificate. BCSB and Baltimore County Bank shall have
delivered to Heritage Bank a certificate, dated the Closing Date and signed,
without personal liability, by its president, to the effect that the conditions
set forth in subsections (a) through (e) of this Section 6.01 have been
satisfied; and
(h) Funds Deposited with the Exchange Agent. Baltimore County Bank shall
have deposited or caused to be deposited, in trust with the Exchange Agent, an
amount of cash equal to the aggregate Merger Consideration that the holders of
WHG Common Stock shall be entitled to receive on the Merger Effective Date
pursuant to Section 2.02 of this Agreement.
Section 6.02 Conditions to BCSB and Baltimore County Bank's Obligations
under this Agreement.
The obligations of Baltimore County Bank and BCSB hereunder shall be
subject to satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by BSCB or Baltimore County Bank pursuant to Section
8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on the
part of, WHG and Heritage Bank to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated by this Agreement, shall have been duly and validly taken by WHG
and Heritage Bank; and Baltimore County Bank shall have received certified
copies of the resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of WHG and each WHG
Subsidiary required by this Agreement to be performed at or prior to the Closing
Date shall have been duly performed and complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of WHG, Heritage Bank and each WHG Subsidiary set forth in this
Agreement which is qualified
40
as to materiality shall be true and correct and each such representation and
warranty that is not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement, and as of the Closing
Date as though made on and as of the Closing Date (except as to any
representation or warranty which specifically relates to an earlier date);
(d) Approvals of Regulatory Authorities. All required approvals from the
Regulatory Authorities with respect to the Mergers have been received; and all
notice and waiting periods required thereunder shall have expired or been
terminated; provided, however, that no approval or consent referred to herein
shall be deemed to have been received if it shall include any condition or
requirement that, in the aggregate, would so materially reduce the economic or
business benefits of the Merger to BCSB that had such condition or requirement
been known, BCSB, in its reasonable judgment, would not have entered into this
Agreement.
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction that enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) No Material Adverse Effect. Since September 30, 2001, there shall
not have occurred any Material Adverse Effect with respect to WHG or Heritage
Bank;
(g) Certain Loans. There shall not have been an increase of more than
$2.75 million ($2,750,000) in commercial loans and multi-family loans delinquent
ninety days or more (90) days as of any month end prior to the Closing Date,
compared to the amount of such delinquencies as of the month end prior to the
date of this Agreement; and
(h) Officer's Certificate. WHG shall have delivered to BCSB a
certificate, dated the Closing Date and signed, without personal liability, by
its chairman of the board or president, to the effect that the conditions set
forth in subsections (a) through (g) of this Section 6.02 have been satisfied.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination.
This Agreement may be terminated at any time prior to the Merger
Effective Date:
(a) by mutual written consent of the parties authorized by their
respective boards of directors;
(b) by BCSB or Baltimore County Bank, or WHG or Heritage Bank (i) if the
Merger Effective Date shall not have occurred on or prior to September 30, 2002,
(ii) if a vote of the stockholders of WHG is taken and such stockholders fail to
approve this Agreement at the meeting of stockholders (or any adjournment
thereof) of WHG contemplated by Section 5.04(b) hereof, or (iii) any applicable
regulatory authority formally disapproves the issuance of any required
regulatory approval, unless in the case of clauses (i) and (ii) of this Section
7.01(b) such failure is due to the
41
failure of the party seeking to terminate this Agreement to perform or observe
its agreements set forth herein to be performed or observed by such party on or
before September 30, 2002 or such meeting of stockholders, as the case may be.
(c) by BCSB or Baltimore County Bank if (i) at the time of such
termination any of the representations and warranties of WHG or Heritage Bank
contained in this Agreement shall not be true and correct to the extent that the
condition set forth in Section 6.02(b) or (c) hereof cannot be satisfied, (ii)
there shall have been any material breach of any covenant, agreement or
obligation of WHG or Heritage Bank hereunder and such breach shall have not been
remedied by WHG or Heritage Bank within fifteen business days after receipt by
them of notice in writing from BCSB or Baltimore County Bank specifying the
nature of such breach and requesting that it be remedied, (iii) any applicable
Regulatory Authority approves the transactions contemplated but with conditions
attached such that the requirements of Section 6.02(d) are not satisfied, (iv)
WHG has received a Superior Proposal, and in accordance with Section 5.06 of
this Agreement, the Board of Directors of WHG has entered into an acquisition
agreement with respect to the Superior Proposal, terminated this Agreement, or
withdraws its recommendation of this Agreement, fails to make such
recommendation or modifies or qualifies its recommendation in a manner adverse
to BCSB, or (v) any event occurs such that a condition set forth in Sections
6.02 hereof which must be fulfilled before BCSB or Baltimore County Bank is
obligated to consummate the Merger cannot be fulfilled and non-fulfillment is
not waived by BCSB or Baltimore County Bank.
(d) by WHG or Heritage Bank if (i) at the time of such termination any
of the representations and warranties of Baltimore County Bank and BCSB
contained in this Agreement shall not be true and correct to the extent that the
condition set forth in Section 6.01(b) or (c) hereof cannot be satisfied, (ii)
there shall have been any material breach of any covenant, agreement or
obligation of Baltimore County Bank or BCSB hereunder and such breach shall not
have been remedied within fifteen business days after receipt by Baltimore
County Bank of notice in writing from Heritage Bank specifying the nature of
such breach and requesting that it be remedied, (iii) any event occurs such that
a condition set forth in Sections 6.01 hereof which must be fulfilled before
Heritage Bank is obligated to consummate the Merger cannot be fulfilled and
non-fulfillment is not waived by Heritage Bank, or (iv) WHG has received a
Superior Proposal, and in accordance with Section 5.06 of this Agreement, the
Board of Directors of WHG has made a determination to accept such Superior
Proposal; provided that WHG shall not terminate this Agreement pursuant to this
Section 7.01(d)(iv) and enter in a definitive agreement with respect to the
Superior Proposal until the expiration of three (3) business days following BCSB
and Baltimore County Bank's receipt of written notice advising BCSB and
Baltimore County Bank that WHG has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal (and including a copy
thereof with all accompanying documentation, if in writing) identifying the
person making the Superior Proposal and stating whether WHG intends to enter
into a definitive agreement with respect to the Superior Proposal. After
providing such notice, WHG shall provide a reasonable opportunity to BCSB and
Baltimore County Bank during the three-day period to make such adjustments in
the terms and conditions of this Agreement as would enable WHG to proceed with
the Merger on such adjusted terms.
42
Section 7.02. Effect of Termination.
Except as otherwise provided in this Agreement, if this Agreement is
terminated pursuant to Section 7.01 hereof, this Agreement shall forthwith
become void (other than Section 8.01 and the last sentences of Sections 5.02 and
5.10(a)(ii), which shall remain in full force and effect), and there shall be no
further liability on the part of Baltimore County Bank, BCSB, WHG or Heritage
Bank to the other, except that no party shall be relieved or released from any
liabilities or damages arising out of its willful or fraudulent breach of any
provision of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses.
(a) Except as provided herein, each party hereto shall bear and pay all
costs and expenses incurred by it in connection with the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and counsel. Section 8.01(a) shall not be construed to
relieve or release a breaching party from any liability or damages arising out
of its willful breach of any provision of this Agreement.
(b) As a condition of BCSB and Baltimore County Bank's willingness, and
in order to induce BCSB and Baltimore County Bank to enter into this Agreement
and to reimburse BCSB and Baltimore County Bank for incurring the costs and
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, WHG and Heritage Bank hereby agrees
to pay Baltimore County Bank, and Baltimore County Bank shall be entitled to
payment of a fee of $1,000,000 (the "Fee"), within three business days after
written demand for payment is made by Baltimore County Bank, following the
occurrence of any of the events set forth below:
(i) WHG terminates this Agreement pursuant to Section 7.01(d)(iv) or
BCSB or Baltimore County Bank terminates this Agreement pursuant to Section
7.01(c)(iv); or
(ii) the entering into a definitive agreement by WHG relating to an
Acquisition Proposal or the consummation of an Acquisition Proposal involving
WHG within twelve months after the occurrence of any of the following: (i) the
termination of the Agreement by BCSB or Baltimore County Bank pursuant to
Section 7.01(c)(ii); (ii) the failure of the stockholders of WHG to approve this
Agreement after the occurrence of an Acquisition Proposal, or (iii) September
30, 2002 if prior thereto the WHG stockholders have not approved this Agreement.
If demand for payment of the Fee is made pursuant to this Section
8.01(b) and payment is timely made, then neither BCSB nor Baltimore County Bank
will have any other rights or claims against WHG or Heritage Bank, their
Subsidiaries, and their respective officers and directors, under this Agreement,
it being agreed that the acceptance of the Fee under this Section 8.01(b) will
constitute the sole and exclusive remedy of BCSB and Baltimore County Bank
against WHG and Heritage Bank, their Subsidiaries and their respective officers
and directors.
43
Section 8.02 Non-Survival of Representations and Warranties.
All representations, warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants, other than those covenants
set forth in Sections 2.02, 5.05, 5.10(a)(ii) and 5.11, which will survive the
Merger, shall terminate on the Closing Date.
Section 8.03 Amendment, Extension and Waiver.
Subject to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of either party hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained in Articles V and VI hereof or otherwise. This Agreement
may not be amended except by an instrument in writing authorized by the
respective Boards of Directors and signed, by duly authorized officers, on
behalf of the parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by a duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 8.04 Entire Agreement.
This Agreement, including the documents and other writings referred to
herein or delivered pursuant hereto, contains the entire agreement and
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior arrangements and understandings between the parties, both
written and oral with respect to its subject matter. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors; provided, however, that nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors, any rights, remedies, obligations or liabilities
other than pursuant to Sections 2.02, 2.03, 5.05 and 5.11(c), (d) and (e).
Section 8.05 No Assignment.
Neither party hereto may assign any of its rights or obligations
hereunder to any other person, without the prior written consent of the other
party hereto.
Section 8.06 Notices.
All notices or other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by prepaid registered or
certified mail (return receipt requested), or sent by telecopy, addressed as
follows:
44
(a) If to Baltimore County Bank or BCSB to:
Baltimore County Savings Bank
0000 X. Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx
Attention: Xxxx X. Xxxxxxxxx
President
with a copy to:
Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, PC
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxx, Esq.
Xxxx Xxxx, Esq.
(b) If to WHG or Heritage Bank, to:
Heritage Savings Bank
0000 Xxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxx. Xxxxx X. Xxxxxxx
President and Chief Executive Officer
with a copy to:
Xxxxxxx Spidi & Xxxxx, PC
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Spidi, Esq.
Section 8.07 Captions.
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
Section 8.08 Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
45
Section 8.09 Severability.
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
Section 8.10 Governing Law.
This Agreement shall be governed by and construed in accordance with the
domestic internal law (including the law of conflicts of law) of the State of
Maryland.
46
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BCSB BANKCORP, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxxx
President
BALTIMORE COUNTY SAVINGS BANK
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxxx
President
HERITAGE SAVINGS BANK
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive
Officer
WHG BANCSHARES CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive
Officer
EXHIBIT A
February 27, 2002
Baltimore County Bank
0000 X. Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Baltimore County Savings Bank, F.S.B. ("Baltimore County Bank"), BCSB
Bankcorp, Inc. ("Bankcorp"), and WHG Bancshares, Inc. ("WHG") and Heritage
Savings Bank, F.S.B. ("Heritage Bank") have entered into an Agreement and Plan
of Merger dated as of February 27, 2001 (the "Merger Agreement"), pursuant to
which, subject to the terms and conditions set forth therein, (a) WHG will merge
with and into a subsidiary of Baltimore County Bank, with WHG surviving the
merger, to be followed by the merger of WHG with and into Baltimore County Bank,
with Baltimore County Bank surviving the merger, to be followed by the merger of
Heritage Bank with and into Baltimore County Bank, with Baltimore County Bank
surviving the merger (collectively referred to as the "Merger"); and (b)
shareholders of WHG will receive $14.25 in cash in exchange for each share of
common stock of WHG outstanding on the closing date.
BCSB and Baltimore County Bank has requested, as a condition to its
execution and delivery to WHG of the Merger Agreement, that the undersigned,
being directors and executive officers of WHG, execute and deliver to BCSB and
Baltimore County Bank this Letter Agreement.
Each of the undersigned, in order to induce BCSB and Baltimore County
Bank to execute and deliver to WHG the Merger Agreement, and intending to be
legally bound, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of WHG called to vote for approval of the Merger so that all shares
of common stock of WHG over which the undersigned (individually or jointly with
a member of the undersigned's immediate family) now has both (i) sole or shared
voting power, and (ii) sole or shared beneficial ownership, will be counted for
the purpose of determining the presence of a quorum at such meetings and to
vote, or cause to be voted, all such shares (x) in favor of approval and
adoption of the Merger Agreement and the transactions contemplated thereby
(including any amendments or modifications of the terms thereof approved by the
Board of Directors of WHG), and (y) against approval or adoption of any other
merger, business combination, recapitalization, partial liquidation or similar
transaction involving WHG;
(b) Agrees not to vote or execute any written consent to rescind or
amend in any manner any prior vote or written consent, as a shareholder of WHG,
to approve or adopt the Merger Agreement;
(c) Agrees not to sell, transfer or otherwise dispose of any common
stock of WHG on or prior to the date of the meeting of WHG shareholders to vote
on the Merger Agreement, except for transfers to charities, charitable trusts,
or other charitable organizations under Section 501(c)(3) of the IRC, lineal
descendant or a spouse of the undersigned, or to a trust or other entity for the
benefit of one or more of the foregoing persons, provided that the transferee
agrees in writing to be bound by the terms of this letter agreement; and
(d) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights and general equitable
principles.
The obligations set forth herein shall terminate concurrently with any
termination of the Merger Agreement.
____________________________
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
____________________________
The undersigned intend to be legally bound hereby.
Sincerely,
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Name
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Title
